Fundamental overview:
USD/JPY is expected to trade with bearish bias after hitting two-week low of 116.64 this morning. It is undermined by the flows to safe haven JPY amid increased risk aversion (VIX fear gauge rose 11.78% to 20.97, S&P 500 closed 1.3% lower at 1,994.99 Friday) as heightened worries about global growth spread to the US after the US 4Q flash GDP growth of 2.6% (versus forecast +3.2%). Risk sentiment is further dented by the Sunday's data showing China's official PMI unexpectedly fell to 49.8 in January from 50.1 in December (versus forecast 50.3) for its first dip below 50 since September 2012. USD/JPY is also weighed by the weaker USD sentiment after the disappointing US GDP data, lower US Treasury yields (10-year at 1.680% versus 1.753% late Thursday) and Japan's exports. But the USD sentiment is soothed by the stronger than expected US January ISM-Chicago PMI of 59.4 (versus forecast 57.5). USD/JPY losses also tempered by the demand from the Japanese importers and by the ultra-loose Bank of Japan's monetary policy.

Technical comment:
The daily chart is mixed as the MACD s bearish, but stochastics is neutral; five and 15-day moving averages are meandering sideways.

Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below the pivot point. Short positions are recommended with the first target at 117.20. A break of this target will move the pair further downward to 117. The pivot point stands at 118.20. 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, a long position is recommended with the first target at 118.45 and the second target at 118.75.

Resistance levels:
118.45
118.75
119
Support levels:
117.20
117.
116.80