Overview:

USD/JPY is expected to consolidate after hitting its seven-week low of 101.77 on Monday. It is undermined by the flows to the safe-haven yen amid weaker risk appetite (S&P fell 0.49% overnight) on lingering concerns over emerging markets and prospect of further scaling down of the Federal Reserve's stimulus program. USD/JPY is also weighed by the smaller-than-expected U.S. December new home sales of 414,000 (versus 455,000 forecast) and Japan's exports volumes. But the USD/JPY losses are tempered by higher U.S. Treasury yields demand from the Japanese importers, widening Japan's December trade deficit, ultra-loose Bank of Japan's monetary policy, and traders positions adjustments ahead of the Fed's policy announcement on Wednesday.

Technical сomment:
Daily chart is still negative-biased as MACD and stochastics are bearish, five and 15-day moving averages are declining.

Trading recommendation:

The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. A short position is recommended with the first target at 102.25. A breach of this target will move the pair further downwards to 101.9. The pivot point stands at 103.05. In case the price moves in the opposite direction, bounces back from support, and moves above its pivot point, it is most favourably expected to move further to the upside. In that scenario a long position is recommended with the first target at 103.55 and the second target at 103.8.

Resistance levels:
103.55
103.8
104.1

Support levels:
102.25
101.9
101.75