Fundamental overview:

USD/JPY is expected to consolidate with a bullish bias after hitting near-seven-year high 114.21 on Monday. It is underpinned by the positive USD sentiment (ICE spot dollar index last 87.29 versus 87.07 early Monday) after surprise rise in U.S. ISM manufacturing PMI to 59.0 in October--its highest level since March 2011--from 56.6 in September (versus forecast for drop to 56.0). USD/JPY is also supported by the higher U.S. Treasury yields (10-year at 2.346% versus 2.335% late Friday) as strong ISM data raised speculation of earlier Federal Reserve tightening than currently priced; demand from Japan importers, weak yen sentiment after Bank of Japan's unexpected announcement of fresh stimulus on Friday. But USD sentiment is dented by the surprise 0.4% drop in U.S. September construction spending (versus forecast +0.8%). USD/JPY gains are also tempered by Japan's export sales and diminished investors risk appetite (VIX fear gauge rose 4.99% to 14.73, S&P 500 closed 0.01% lower at 2,017.81 overnight). Daily chart is positive-biased as MACD and stochastics are bullish, although the latter is in the overbought zone; five-day moving average is above 15-day MA and is advancing.

Technical comment:
Daily chart is positive-biased as MACD and stochastics are bullish, although the latter is in the overbought zone, five-day moving average is above 15-day MA and is advancing.

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 114.70 and the second target at 115.70. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 110.50. A break of this target would push the pair further downwards and one may expect the second target at 109.40. The pivot point is at 112.85.

Resistance levels:
114.70
115.70
116

Support levels:
112.30
111.45
111