USD/JPY is under pressure. The pair has been capped by a descending trend line since October 14 and is holding on the downside. The 20-period moving average crossed below the 50-period one, which maintains the downside bias. The relative strength index is below its neutrality area at 50, and calls for further decline.

On Tuesday, the US stocks posted gains, lifted by solid corporate earnings. The Dow Jones Industrial Average rose by 75 points (+0.4%) to 18,161, the S&P 500 gained 13 points (+0.6%) to 2,139.6, and the Nasdaq Composite was up 44 points (+0.9%) to 5,243.

Healthcare shares were market leaders. UnitedHealth rose 6.9% after reporting an over 11% increase in third-quarter revenue and raising its full-year earnings forecast. Pfizer gained 0.6% as it announced plans to launch a cheaper biosimilar to Remicade, the top selling product of Johnson & Johnson, which declined 2.6%.

On the economic data front, the U.S. Labor Department reported that Consumer Price Index (CPI) grew 1.5% on year (as expected) in September. Core CPI excluding food and energy costs increased 2.2% on year (vs. +2.3% expected).

To sum up, as long as 104.20 is not surpassed, the pair is expected to pullback to 103.65. In case of a breakout, look for further downside movement towards 103.30.

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 103.30. A break below this target will move the pair further downwards to 103.15. The pivot point stands at 104.20. 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 104.40 and the second one at 104.85.

Resistance levels: 104.40, 104.85, 105.3

Support levels: 103.30, 103.15, 102.80