Overview:

USD/JPY is expected to consolidate with risks skewed lower. USD/JPY is undermined by selling of yen crosses amid increasing risk aversion (VIX fear gauge surged 27.16% to 16.95, S&P 500 tumbled 2.0% to close at 1,930.67 overnight) amid worries that interest rates might rise sooner than expected after Wednesday's strong U.S. 2Q GDP report, fears of contagion on emerging markets from Argentina's debt default. USD/JPY is also weighed by the Japanese export sales. But USD/JPY losses are tempered by the demand from Japanese importers and the positive dollar sentiment (ICE spot dollar index last 81.46 versus 81.42 early Thursday) as Wednesday's strong U.S. 2Q GDP data continue to impact; positions adjustment before the weekend. U.S. data overnight were mixed as higher-than-expected +0.7% rise in U.S. 2Q employment cost index (versus forecast +0.5%) and less-than-expected 302,000 U.S. jobless claims for the week ended July 26 (versus forecast 305,000) offset surprise drop in U.S. ISM-Chicago PMI to one-year low of 52.6 in July from 62.6 in June (versus forecast for rise to 63.0).

Technical comment:
The daily chart is mixed as MACD is bullish, 5 and 15-day moving averages are advancing, but stochastics is turning bearish in the overbought zone, inside-day-range pattern was completed on Thursday.

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 its pivot point. Short position is recommended with the first target at 102.40. A break of this target will move the pair further downwards to 102.15. The pivot point stands at 103. In case the price moves in the opposite direction and bounces back from the support level, then it will move 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 103.15 and the second target at 103.40.

Resistance levels:
103.15
103.40
103.75

Support levels:
102.40
102.15
101.85