USD/JPY is expected to trade with bearish bias as the key resistance is at 121.95. Overnight, US stock indices ended lower after a choppy session, dragged by shares in consumer durables and apparel as well as technology hardware and financial sectors. Investors also eyed a renewed decline in oil prices. The Dow Jones Industrial Average fell 0.4% to 17,492, the S&P 500 declined 0.8% to 2,047, and the Nasdaq Composite was down 1.5% to 5,022. Nymex crude oil dropped a further 0.9% to $37.16 a barrel, gold edged down 0.1% to $1,072 an ounce, and the benchmark 10-year Treasury was down to 2.208% from 2.239% in the previous session.

At the same time. the US dollar retreated as investors braced for next week's Federal Reserve policy meeting. EUR/USD surged 1.2% to 1.1025 and USD/JPY plunged 1.2% to 121.42. This morning, New Zealand's central bank cut its official cash rate by 25 basis points to 2.50% (as expected) while pointing out that this should be sufficient to return inflation to its target, causing NZD/USD to surge up to 0.6775 from a low of 0.6579. Besides, Australia's jobless rate dropped to 5.8% in November (vs 6.0% expected) from 5.9% in October, sending AUD/USD to soar over 1% to 0.7333. The pair has posted a rebound after falling as low as 121.04 overnight. It is currently being capped by the declining 20-period (30-minute chart), which stands below the 50-period one. The relative strength index remains below the neutrality level at 50. As long as the key resistance at 121.95 is not surpassed, the pair should fall toward the first downside target at 121.00 (around yesterday's low) before dropping further to 120.55 (last seen on November 3).

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 121. A break of that target will move the pair further downwards to 120.50. The pivot point stands at 121.95. 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 122.45 and the second target at 122.70.

Resistance levels: 122.45 122.70 123.10

Support levels: 121 120.50 120.10