Fundamental overview:
USD/JPY is expected to consolidate. It is underpinned by the reduced safe-haven appeal of the yen amid improved global risk sentiment (VIX fear gauge eased 7.34% to 19.43; S&P 500 closed 1.3% higher at 2,020.85 overnight) as oil prices surged for the second day straight and investors shook off the data showing slowing activity in the U.S. and China's manufacturing sectors. USD/JPY is also supported by the 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 the weaker dollar sentiment (ICE spot dollar index last 94.57 versus 94.67 early Monday) on worse than expected drop in the U.S. ISM manufacturing PMI to 53.5 in January (versus forecast 54.3) from 55.1 in December and by weaker than expected 0.4% rise in the U.S. December construction spending (versus forecast +0.8%).

Technical comment:
The daily chart is mixed as the MACD is bearish, but stochastics is neutral; five- and 15-day moving averages are meandering sideways.

Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below the pivot point. Short positions are recommended with the first target at 117. A break of this target will move the pair further downward to 116.55. The pivot point stands at 117.75. 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, a long position is recommended with the first target at 118.20 and the second target at 118.45.

Resistance levels:
118.20
118.45
118.75
Support levels:
117
116.55
116.80