Overview:

USD/JPY is expected to consolidate with a bullish bias after hitting a seven-month high at 104.49 this morning. It is underpinned by the positive dollar sentiment (ICE spot dollar index last 82.56 versus 82.16 early Friday) after less-dovish-than-expected speech from Federal Reserve chairwoman Janet Yellen at Jackson Hole on Friday. Her comments appeared more neutral than previously about concerns over slack in the labor market, encouraging market participants to prepare for the eventual rise in official short-term interest rates. USD/JPY is also supported by the demand from Japanese importers as well as rise in shorter-dated U.S. Treasury yields (2-year at 0.492% versus 0.468% late Thursday). But USD/JPY gains are tempered by the Japanese export sales and selling of yen crosses amid diminished investor risk appetite (S&P 500 slipped 0.2% Friday to close at 1,988.4) on fresh signs of Russia-Ukraine geopolitical tensions.

Technical comment:
The daily chart is positive-biased as MACD and stochastics are bullish, although the latter is at overbought; five and 15-day moving averages are advancing.

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 104.25 and the second target at 104.50. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 103.40. A break of this target would push the pair further downwards and one may expect the second target at 103. The pivot point is at 103.65.

Resistance levels:
104.25
104.50
104.80

Support levels:
103.40
103
102.70