USD/JPY is expected to trade with a bullish bias. The pair is trading under its 20-period and 50-period moving averages, but still holds above its key horizontal support at 108.35. The technical indicators are mixed, and calling for caution. Even though a continuation of the consolidation at the current stage cannot be ruled out, its extent might be limited by 108.35.

On Wednesday, shares in financial, utilities and energy sectors pulled back, causing the Dow Jones Industrial Average to drop 54 points (-0.3%) to 18,868, snapping a seven-session winning streak. The S&P 500 declined 3 points (-0.2%) to 2,176. Meanwhile, technology shares gained lifting the Nasdaq Composite 18 points (+0.4%) higher to 5,294.On the economic data front, October PPI remained unchanged (vs. +0.3% on month expected) and industrial production was stable (vs. +0.2% on month expected).

The U.S. dollar marched higher with the ICE U.S. Dollar Index chalking a session-high of 100.57, the highest intraday level since April 2003, before settling at 100.41, up 0.2% on day. The index has been up for eight consecutive sessions gaining 3.5% in total.

As long as this key support level is not broken, look for a new rebound to 109.85 (the previous top) and 110.60 in extension.

Trading Recommendation: 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. Therefore, long positions are recommended with the first target at 109.85 and the second one at 110.60. In the alternative scenario, short positions are recommended with the first target at 107.70 if the price moves below its pivot point. A break of this target is likely to push the pair further downwards, and one may expect the second target at 106.90. The pivot point lies at 108.35.

Resistance levels: 109.85, 110.60, 111.15

Support levels: 107.70, 106.90, 106.15