USD/JPY is expected to trade with bullish bias. Overnight, US stocks followed the European markets higher with the Dow Jones Industrial Average gaining 0.8% to 16,510, the S&P 500 rising 0.5% to 1,966, and the Nasdaq Composite being broadly flat at 4,828. Nymex crude oil surged 4.5% to $46.68 a barrel, while gold lost 0.5% to $1,133 an ounce. The 10-year Treasury yield climbed to 2.212% from 2.130% in the previous session. Meanwhile, the US dollar kept strengthening against most other major currencies as several regional Federal Reserve presidents hinted that interest rate increases within this year are still possible. After dropping 1.1% last Friday, EUR/USD slid further by 1.1% overnight to 1.1186. The pair keeps trading on the upside while being supported by the ascending 50-period intraday moving average (MA). The intraday relative strength indicator (RSI) is a bit below the neutrality level of 50, pointing out that a consolidation is in progress. However, as long as 119.65 holds as the key support, the consolidation's extent should be limited. The first upside target is set at 120.75 (a base formed on September 17).

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 120.75 and the second target at 121. In the alternative scenario, short positions are recommended with the first target at 119.35. if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 118.90. The pivot point is at 119.65.

Resistance levels: 120.75 121 121.50

Support levels: 119.35 118.90 118.20