Overview:

USD/JPY is expected to trade in a higher range. It is underpinned by the yen-funded carry trades amid the positive risk sentiment (VIX fear gauge eased 0.89% to 12.21, S&P 500 rose 0.5% to close at 1,981.6 overnight) on strong U.S. housing data and benign inflation data: U.S. housing starts rose stronger-than-expected 15.7% to 1.093 million in July (versus forecast +7.6%) and building permits increased to 1.052 million (versus forecast 1.005 million); U.S. July core CPI came in lower-than-expected at +0.1% (versus forecast +0.2%), giving the Federal Reserve room to keep monetary policy loose. Meanwhile, geopolitical risks waned as news that Russian President Putin will meet with Ukrainian leadership next week raised hopes for a solution to turmoil in the region. USD/JPY is also supported by the demand from Japanese importers, higher U.S. Treasury yields (10-year last at 2.403% versus 2.387% late Monday), as well as the positive dollar sentiment (ICE spot dollar index last at 81.87 versus 81.59 early Tuesday). But USD/JPY gains are tempered by Japanese export sales.

Technical comment:
Tjhe daily chart is positive-biased as MACD and stochastics are bullish, five and 15-day moving averages are 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 103.60 and the second target at 103.75. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 102.70. A break of this target would push the pair further downwards and one may expect the second target at 102.50. The pivot point is at 102.85.

Resistance levels:
103.60
103.75
104

Support levels:
102.70
102.50
102.20