USD/JPY is expected to trade with a bearish bias as the key resistance at 111.40. The pair remains under pressure below its horizontal resistance at 111.40, and lacks upward momentum. Even though a continuation of the rebound at the current stage cannot be ruled out, its extent should be limited. The relative strength index is mixed to bearish. USD/JPY kept the day-low at 110.23 chalked immediately after a magnitude 6.9 earthquake struck Japan off the coast of Fukushima and triggered a tsunami alert. The pair spent the rest of the session fighting its way back and touched a day-high of 111.35. It finally settled at 111.12, up 0.3% on day.
Thus, as long as 111.40 is not broken above, a further drop is expected with 110.2 and 109.8 as the targets.
Trading Recommendation: 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 110.20. A break below this target will move the pair further downwards to 109.80. The pivot point stands at 111.40. 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 112.00 and the second one at 112.65.
Resistance levels: 112.00, 112.45, 113.15
Support levels: 110.20, 109.80, 109.20
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