Fundamental Outlook:
USD/JPY is likely to consolidate with bearish bias. It is trading with lower liquidity as the US financial floors are closed for the Easter holiday and market is waiting for Non Farm payroll data due to come out later today. It is underpinned by positive dollar sentiment (ICE spot dollar index last 97.94 versus 97.42 early Monday) after stronger-than-expected 3.1% increase in US pending home sales index to 106.9 in February (versus forecast +0.5%) and larger-than-expected 0.4% rise in US February personal income (versus forecast +0.3%). USD/JPY is also supported by the demand from Japan importers and ultra-loose Bank of Japan's monetary policy. Yen-funded carry trades increased amid positive investor risk appetite (VIX fear gauge eased 3.72% to 14.51; S&P 500 closed up 1.22% at 2,086.24 overnight) and optimism that any interest rate hike from the Federal Reserve would be gradual, while People's Bank of China Governor Zhou Xiaochuan said China is ready to launch additional monetary easing if inflation continues to slip.

Technical comment:
USD/JPY gains are also tempered by the Japan exporter sales. The daily chart is mixed as the MACD is bearish, but stochastics is rising towards oversold levels.

Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below the pivot point. Short positions are recommended with the first target at 119.25. A break of that target will move the pair further downwards to 118.85. The pivot point stands at 120. 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, a long position is recommended with the first target at 120.30 and the second target at 120.55.

Resistance levels:
120.30
120.55
120.85

Support levels:
119.25
118.85
118.30