Fundamental Outlook:
USD/JP is expected to trade in a range. It is underpinned by bullish dollar sentiment (the ICE spot dollar index hit a 12-year high of 100.42 this morning, last 100.25 versus 99.27 early Friday) as expectations prevailed that the Federal Reserve could raise interest rates the middle of the year. USD/JPY is also supported by higher longer-dated US Treasury yields (10-year at 2.110% versus 2.096% late Thursday), demand from Japan importers and ultra-loose monetary policy of the Bank of Japan. But USD/JPY gains are tempered by the Japanese exports and selling of yen crosses amid increased aversion to risks (VIX fear gauge rose 3.76% to 16.00, S&P 500 closed 0.61% lower at 2,053.4 on Friday), weaker-than-expected preliminary consumer sentiment index of 91.2 for March from the US University of Michigan (versus forecast 95.3), a drop 0.5% in the US February PPI (versus forecast +0.3%), and fears that strong USD would crimp the US corporate earnings.

Technical comment:
The daily chart is still positive-biased as the MACD is bullish, stochastic stays above overbought levels, and 5 and 15-day moving averages are advancing. Although, an inside-day-range pattern was completed on Friday.

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 120.90. A break of that target will move the pair further downwards to 120.20. The pivot point stands at 121.65. 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 upside. According to that scenario, a long position is recommended with the first target at 122 and the second target at 122.50.

Resistance levels:
122
122.50
122.75

Support levels:
120.90
120.60
120.20