Fundamental outlook:
USD/JPY is expected to trade with risks skewed lower. It is undermined by the softer dollar sentiment (ICE spot dollar index last 96.85 versus 96.94 early Monday) on weaker-than-expected Markit US April flash services PMI of 57.8 (versus forecast 59.5), while expectations prevailed that the Federal Reserve would remain patient about raising interest rates in its Wednesday's policy statement following a number of disappointing releases on US new jobs, retail sales, and manufacturing activities. USD/JPY is also weighed by the Japan export sales and flows to haven the yen amid decreased investor risk tolerance (VIX fear gauge rose 6.75% to 13.12, S&P 500 closed 0.41% lower at 2,108.92 overnight). But USD/JPY losses are tempered by the demand from Japan importers, ultra-loose Bank of Japan's monetary policy, and higher US Treasury yields (2-year at 0.524% versus 0.512% late Friday), Fitch on Monday downgrading Japan's long-term foreign and local credit issuer rating by one notch to A from A-plus.

Technical comment:
The daily chart is negative-biased as the MACD and stochastics are bearish, five-day moving average is below 15-day moving average and is declining.

Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 118.50. A break of that target will move the pair further downwards to 118.30. The pivot point stands at 119.45. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 119.75 and the second target at 120.10.

Resistance levels:
119.75
120.10
120.45

Support levels:
118.50
118.30
117.75