Fundamental Overview:

USD/JPY is expected to consolidate with a bearish bias. Liquidity was thin in Asia Tuesday as financial markets in Japan were shut today for a public holiday. USD/JPY is undermined by the flows to haven JPY and unwinding of JPY-funded carry trades amid increased risk aversion (VIX fear gauge rose 13.05% to 13.69, S&P 500 closed 0.8% lower at 1,994.29 overnight) as worries mount over global growth after China's Finance Minister Lou Jiwei said the Chinese economy is facing downward pressure, but Beijing won't "make major policy adjustments" due to changes in any individual economic indicator, dampening hopes for aggressive easing of policies. USD/JPY is also weighed by the buy-yen orders from Japan exporters, lower U.S. Treasury yields (10-year at 2.566% versus 2.587% late Friday) and weaker dollar sentiment (ICE spot dollar index last 84.68 versus 84.74 early Monday) after surprise 1.8% drop in U.S. existing home sales to 5.05 million in August (versus forecast of 1.0% increase to 5.2 million), fall in Chicago Fed's National Activity Index to minus 0.21 in August from plus 0.26 in July. But USD/JPY losses are tempered by the sell-yen orders from Japanese importers and ultra-loose Bank of Japan's monetary policy.

Technical comment:
The daily chart is still positive-biased as MACD is bullish, stochastics stays elevated in the overbought zone, 5 and 15-day moving averages are advancing, although inside-day-range pattern was completed on Monday.

Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As long as the price is keeping above its pivot point, a long position is recommended with the first target at 109.15 and the second target at 109.45. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 108.15. A break of this target would push the pair further downwards and one may expect the second target at 107.65. The pivot point is at 108.45.

Resistance levels:
109.15
109.45
110

Support levels:
108.15
107.65
107.10