USD/JPY is expected to trade with a bullish bias.Overnight, the US stock indices ended higher for the second day as shares in energy, banking, and financial sectors posted gains. The Dow Jones Industrial Average rose by 0.9% to 17524, the S&P 500 gained 1.1% to 2043, and the Nasdaq Composite was 0.9% up to 4995.

Nymex crude oil kept rebounding and settled 2.9% higher at $37.35 a barrel. Gold was down another 0.2% to $1060 an ounce. And the benchmark 10-year Treasury yield increased to 2.269% from 2.225% in the previous session.

Just a day before the Federal Reserve announced its interest rate decision, the US dollar strengthened against other major currencies. The Wall Street Journal reported the US dollar index climbed by 0.4% to the level of 89.96. EUR/USD lost 0.6% falling to 1.0927, GBP/USD fell 0.7% to 1.5036, and USD/JPY gained 0.5% to 121.65. Meanwhile, AUD/USD reversed and dropped 0.7% to 0.7191. The pair has been rebounding since falling as low as 120.55 overnight. Currently, it is trading above the ascending 20-period (30-minute chart) moving average, which stands above the 50-period one. And the intraday relative strength index remains above the neutrality level of 50. With such a bullish intraday outlook, the pair is expected to cross the first upside target at 122.25 (around yesterday's high) before rising toward the second at 122.70 (around the high of December 11).

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 122.25 and the second target at 122.70. In the alternative scenario, short positions are recommended with the first target at 121.15 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 120.90. The pivot point is at 121.45.

Resistance levels: 122.25 122.70 123.20

Support levels: 121.15 120.90 120.50