USD/JPY is expected to trade in a lower range as key resistance is seen at 120.75. Overnight, US stock indices dropped as energy shares were pulled down by falling oil prices. The Dow Jones Industrial Average declined 0.7% to 17603, the S&P 500 also lost 0.7% to 2063, while the Nasdaq Composite was down by 0.8% to 5065. Nymex crude oil slid 3.4% to land at $36.60 a barrel.

Gold fell 0.7% to $1,060 an ounce, and the 10-year Treasury yield edged down to 2.305% from 2.310% in the previous session.

Along with renewed slide in oil prices, the US dollar advanced against commodity currencies: USD/CAD rose 0.3% to 1.3877, AUD/USD declined 0.2% to 0.7283, and NZD/USD fell 0.4% to 0.6835. On the other hand, EUR/USD edged up 0.1% to 1.0929, while USD/CHF was down 0.5% to 0.9881. The pair continues to stay below the key resistance at 120.75 (a price base seen on December 22-23). Intraday technical signals (20- and 50-period moving average on a 30-minute chart, relative strength index) remained mixed. As long as 120.75 holds as the key resistance, the intraday outlook should remain bearish and the pair is expected to decline toward the first downside target at 120.20. The second one is seen at 120.00 (the low of December 25).

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 120.20. A break of that target will move the pair further downwards to 120.00. The pivot point stands at 120.75. 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 121 and the second target at 121.30.

Resistance levels: 121.00, 121.30, 121.75

Support levels: 120.20, 120.00, 119.75