USD/JPY is expected to trade with bearish bias. The US dollar tumbled against other major currencies overnight as the minutes from the Federal Reserve's July meeting showed no clear sign that officials are ready to raise interest rates in September. Besides, the US government reported that CPI increased 0.1% MoM in July, below +0.2% expected. Crude oil plunged 4.3% to a fresh 6-year low of $40.80 a barrel. And US stocks fell sharply, with the Dow Jones Industrial Average dropping 0.9% to 17348.73, the S&P 500 declining 0.8% to 2079.61 and the Nasdaq Composite losing 0.8% to 5019.05. Meanwhile, gold gained 1% to $1128.10 per ounce. Regarding USD/JPY, the pair's downward momentum has strengthened as intraday indicators (including 20-, 50-period intraday moving averages and intraday RSI) remain badly directly. The key resistance has been lowered to 124.16. Though the pair is posting a technical rebound, the extent should be limited and it is expected to return to 123.60 (yesterday's low) and to 123.35 (the low of July 31) in extension.

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 124. A break of that target will move the pair further downwards to 123.75. The pivot point stands at 124.60. 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 to the upside. According to that scenario, long positions are recommended with the first target at 125 and the second target at 125.25.

Resistance levels: 125 125.25 125.60

Support levels: 124 123.75 123.50