Fundamental overview:
USD/JPY is expected to consolidate with risks skewed higher as markets are awaiting 1245 GMT European Central Bank monetary policy decision. USD/JPY is underpinned by the positive dollar sentiment on divergent U.S. monetary policy stance versus other major central banks, stronger-than-expected 4.4% increase in U.S. December housing starts to 1.089 million (versus forecast +1.0% to 1.04 million), reduced allure of the safe-haven yen amid diminished risk aversion (VIX fear gauge eased 5.23% to 18.85; S&P 500 closed up 0.47% at 2,032.12 overnight) as investors widely expect the ECB to deliver on monetary stimulus Thursday, higher U.S. Treasury yields (10-year at 1.859% versus 1.791% late Tuesday), and demand from Japan's importers. But USD sentiment is dented by the surprise 1.9% drop in U.S. building permits to 1.032 million in December (versus forecast +1.0% to 1.06 million). USD/JPY gains are also tempered by Japan's export sales.

Technical comment:
Daily chart is mixed as MACD is bearish, but stochastics is rising from oversold levels.

Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As long as the price is keeping above its pivot point, a long position is recommended with the first target at 118.40 and the second target at 118.85. In an alternative scenario, if the price moves below its pivot points, short posisitions are recommended with the first target at 116.80. A break of this target would push the pair further downwards and one may expect the second target at 116.30. The pivot point is at 117.15.

Resistance levels:
118.40
118.85
119.15

Support levels:
16.80
16.30
116