Overview:

USD/JPY is expected to trade with risks skewed lower. It is undermined by selling of yen crosses amid diminished investor risk appetite (VIX fear gauge rose 3.86% to 12.65, U.S. stocks closed near the flat line overnight with DJIA up 0.03%, S&P 500 up 0.08%) as escalating conflict in Iraq, fresh tensions between Russia and Ukraine, cut in IMF's forecast for U.S. economic growth this year to 2% from 2.8%, and caution before Wednesday's FOMC monetary policy decision, surprise rise in U.S. Empire State's business conditions index to 19.28 in June from 19.01 in May (versus forecast for drop to 15.0), stronger-than-expected 0.6% on-month increase in U.S. May industrial production (versus +0.5% forecast), higher-than-expected rise in U.S. capacity utilization to 79.1% in May (versus 78.9% forecast) from 76.7% in April, stronger-than-expected rise in U.S. NAHB housing market index to 49 in June from 45 in May (versus 47 forecast). USD/JPY is also weighed by Japan's export sales and broadly weaker USD undertone (ICE spot dollar index last 80.45 versus 80.63 early Monday). But USD/JPY losses tempered by demand from the Japanese importers.

Technical comment:
Daily chart is negative-biased as MACD and stochastics are bearish, five-day moving average is below 15-day MA and is declining.

Trading recommendation:
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 far as the price is above its pivot point, a long position is recommended with the first target at 102.40 and the second target at 102.65. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 101.75. A breach of this target will push the pair further downwards and one may expect the second target at 101.55. The pivot point is at 101.90.

Resistance levels:
102.40
102.65
102.80

Support levels:
101.75
101.55
101.45