Fundamental Outlook:
USD/JPY is expected to range-trade. It is underpinned by bullish dollar sentiment (ICE spot dollar index hit 11-year high 96.059 Wednesday, last 95.91 versus 95.37 early Wednesday) as stronger-than-expected U.S. February ISM non-manufacturing PMI of 56.9 (versus forecast 56.2) bolstered expectations that the Federal Reserve could raise interest rates by midyear. The pair is also boosted by the rise of 212,000 jobs in the US private sector in February (slightly below the forecast of +215,000, but above 200,000 for the 13th successive reading), demand from Japan's importers and the ultra-loose Bank of Japan's monetary policy. The upside of USD/JPY is limited by the Japanese exports, lower US Treasury yields (2-year at 0.658% versus 0.682% late Tuesday), flows to the safe haven JPY amid increased risk aversion (VIX fear gauge rose 2.67% to 14.23, S&P 500 closed 0.44% lower at 2,098.53 overnight) as caution sets in ahead of the US February non-farm payrolls that are to be released on Friday.

Technical comment:
The daily chart is mixed as the MACD is bullish, five-day moving average is above 15-day moving average and is advancing. Stochastics is turning bearish, inside-day-range pattern was completed on Wednesday.

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 120.60 and the second target at 120.85. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 119.10. A break of this target would push the pair further downwards, and one may expect the second target at 118.60. The pivot point is at 119.65.

Resistance levels:
120.60
120.85
121.35

Support levels:
119.10
118.60
118.25