USD/JPY is expected to rebound. Overnight, US stocks managed to halt further slippage thanks to a session-end rally. Shares in the automobile and retailing sectors traded higher, while energy stocks dropped sharply as Nymex crude oil plunged 5.3% to $31.41 a barrel. The Dow Jones Industrial Average gained 0.3% to 16,398, the S&P 500 added 0.1% to 1,923, while the Nasdaq Composite was down 0.1% to 4,637.

Gold declined 0.8% to $1,094 an ounce, while the benchmark 10-year Treasury yield edged up to 2.160% from 2.131% in the previous session.

Meanwhile, the US dollar remained mixed. EUR/USD dropped 0.6% to 1.0859, USD/CHF rose 0.7% to 1.0015, while GBP/USD edged up 0.1% to 1.4538 and AUD/USD was up 0.6% to 0.6993. As oil prices spiraled downward, USD/CAD once surged to 1.4246, which was only last seen in April 2003.

The pair rose to as high as 117.90 yesterday before entering a consolidation. Currently, being above the key support at 117.20, it is standing around the over-lapping 20- and 50-period moving averages, showing no downward momentum. If the current consolidation ends above the key support, the pair should retest the first upside target at 118.80.

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, it is recommended to open long positions with the first target at 118.80 and the second target at 119.30. In the alternative scenario, it is recommended to open short positions with the first target at 116.75, 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 116.10. The pivot point is at 117.20.

Resistance levels: 118.80, 119.30, 119.75

Support levels: 116.75, 116.10, 115.75