Fundamental outlook:

USD/JPY is expected to trade with a bullish bias. It is underpinned by the broadly firmer dollar undertone (ICE spot dollar index last 97.90 versus 97.40 early Monday) and positive risk appetite (VIX fear gauge eased 4.25% to 13.3, S&P 500 closed 0.92% up at 2,100.4 overnight) as the European and US stocks reacted positively to the People's Bank of China's one percentage point cut in the reserve requirement ratio for banks. USD/JPY is also supported by higher US Treasury yields (10-year at 1.886% versus 1.850% late Friday), demand from Japan importers, and ultra-loose Bank of Japan's monetary policy. But USD sentiment is dented by a drop in Chicago Fed National Activity Index to -0.42 in March from February's -0.18. USD/JPY gains are also tempered by the Japan export sales.

Technical comment:
The daily chart is mixed as the MACD is bearish, five-day moving average is below 15-day moving average and is declining; but bullish outside-day-range pattern was completed on Monday and stochastic is turning bullish at the oversold levels.

Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. As long as the price holds above its pivot point, long positions are recommended with the first target at 119.80 and the second target at 120.10. In the alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 118.85. A break of this target is likely to push the pair further downwards, and one may expect the second target at 118.50. The pivot point is at 119.10.

Resistance levels:

119.80
120.10
120.50

Support levels:
118.85
118.50
118.30