USD/JPY is expected to trade in a lower range. US stocks posted a choppy session overnight, rising amid signs of stabilization in the European markets and the rate cut by China's central bank, but tumbling in the final minutes of trading. The Dow Jones Industrial Average shed another 1.3% to close at 15,666, the S&P 500 dropped 1.4% to 1,867, while the Nasdaq Composite fell 0.4% to 4,506. Crude oil rebounded 2.8% to close at $39.31 a barrel. And 10-year Treasury yield climbed about 2% from 1.997% in the previous session. Meanwhile, the US dollar recovered some lost ground against the euro and the Swiss franc and strengthened against commodity currencies (CAD, AUD and NZD), but it was still a bit weak against the yen. Regarding USD/JPY, the pair remains under pressure and is heading towards the first downside target at 118.20. The 20-period intraday moving average (MA) has crossed below the 50-period one, while the intraday RSI stays within the selling area between 50 and 30. The second downside target is set at 117.10 (seen on Monday's plunge). Only a break above the key resistance at 120.55 would turn the intraday outlook bullish.

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 118.25. A break of that target will move the pair further downwards to 117. The pivot point stands at 120.55. 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 121.30 and the second target at 122.35.

Resistance levels: 121.30 122.35 123

Support levels: 118.25 117 116.20