Fundamental Overview:

USD/JPY is expected to trade in a lower range. It is undermined by the broadly weaker dollar undertone (ICE spot dollar index last 85.66 versus 85.77 early Tuesday) on lower U.S. Treasury yields (10-year at 2.341% versus 2.425% late Monday), smaller-than-expected $13.52 billion increase in U.S. August consumer credit (versus forecast +$21.1 billion) and stronger yen sentiment after lack of hints from the Bank of Japan on Tuesday about future monetary easing as the central bank left its policy unchanged, and PM Abe's comments about the debilitating effects of a weak yen on households, small and mid-sized companies. USD/JPY is also weighed by the Japanese exporter sales and flows to haven JPY amid increased risk-aversion (VIX fear gauge rose 11.25% to 17.2; S&P 500 closed 1.51% lower at 1,935.1 overnight) as worries mount over slowing global growth after weak German industrial output data and the International Monetary Fund slashing its forecast for global growth to 3.8% next year from an earlier view of 4.0%. But USD/JPY losses are tempered by the demand from Japan importers. Spotlight Wednesday on FOMC Sept. 16-17 meeting minutes (due at 1800 GMT) for clues whether the Federal Reserve might raise interest rates ahead of market expectations, which currently time the first increase around mid-2015. Fed's Dudley suggested Tuesday that it is unlikely the economy will heat up in a way that causes the Fed to chart a more aggressive path than most currently expect.

Technical comment:
Daily chart is negative-biased as MACD and stochastics are bearish, five-day moving average is below 15-day MA and is declining.

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 107.95. A break of this target will move the pair further downwards to 107.65. The pivot point stands at 108.80. 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 109.25 and the second target at 109.55.

Resistance levels:
109.25
109.55
110

Support levels:
107.95
107.65
107.35