Overview:

USD/JPY is expected to range-trade. It is underpinned by the positive dollar sentiment (ICE spot dollar index last 80.43 versus 80.14 early Wednesday) after surprise 9.6% rise in the U.S. new home sales to five-year high of 468,000 in January from December's revised 427,000 (versus forecast for drop to 401,000). USD/JPY is also supported by the demand from the Japanese importers and expansionary Bank of Japan's monetary policy. But USD/JPY gains are tempered by Japan' exports sales; lower U.S. Treasury yields; unwinding of JPY-funded carry trades amid increased risk aversion (VIX fear gauge rose 4.97% to 14.35, S&P closed flat overnight) on mounting tensions over Ukraine as Russia put its armed forces on alert Wednesday and persistent uncertainty about China's yuan policy as the renminbi fell to seven-month lows against the U.S. dollar Wednesday. The People's Bank of China said Wednesday that the CNY selloff was a reflection of market forces and should not be overinterpreted, but the PBOC has been steadily lowering its daily reference rate since the yuan started falling last week.

Technical сomment:
Daily chart is mixed as MACD is bullish, but stochastics is bearish at overbought zone, inside-day-range pattern was completed on Wednesday.

Trading recommendation:

The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. Short position is recommended with the first target at 101.65. A breach of this target will move the pair further downwards to 101.35. The pivot point stands at 102.25. In case the price moves in the opposite direction, bounces back from support level, and then moves above its pivot point, it is likely to move further to the upside. In that scenario, a long position is recommended with the first target at 102.50 and the second target at 102.75.

Resistance levels:
102.50
102.75
103.05

Support levels:
101.65
101.35
101