Fundamental Overview:

USD/JPY is expected to consolidate with buoyant tone after hitting the 2.5-month high of 121.78 on Monday. USD/JPY is supported by the positive dollar sentiment on continued impact from the last Friday's higher-than-expected US April core CPI data. Financial markets in the US, the UK and Frankfurt were shut for holidays on Monday and no major data were released yesterday. USD/JPY is also supported by the higher US Treasury yields, demand from Japan's importers, and the ultra-loose Bank of Japan's monetary policy. But USD/JPY upside is limited by the Japanese exports and profit-taking on long-USD positions ahead of the US data on Tuesday.

Technical comment:

The daily chart is positive-biased as the MACD is bullish, stochastics stays elevated at overbought levels, 5 and 15-day moving averages are advancing.

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 123.50 and the second target at 123.80. In the alternative scenario, short positions are recommended with the first target at 121.70 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 121.40. The pivot point is at 122.45.

Resistance levels: 123.50 123.80 124.15

Support levels: 121.70 121.40 121