Fundamental outlook:
USD/JPY is expected to trade in a lower range. It is undermined by the negative USD sentiment (ICE spot dollar index last 94.14 versus 95.10 early Wednesday) after fewer-than-expected 169,000 increase in ADP U.S. April private sector jobs (versus forecast +205,000), bigger-than-expected 1.9% drop in U.S. 1Q preliminary productivity (versus forecast -1.8%). USD/JPY is also weighed by Japan's export sales and flows to haven JPY amid increased risk aversion (VIX fear gauge rose 5.87% to 15.15, S&P 500 closed 0.45% lower at 2,080.15 overnight) after the weak U.S. ADP jobs data. Besides, the pair's dynamic is affected by comments from Federal Reserve Chairwoman Janet Yellen that equity valuations are "generally quite high," and caution ahead of the U.S. April nonfarm payrolls report Friday. But the USD sentiment is soothed by the larger-than-expected 5.0% increase in U.S. 1Q unit labor costs (versus forecast +4.3%). USD/JPY losses are also tempered by higher U.S. Treasury yields (10-year at 2.252% versus 2.176% late Tuesday), demand from Japan's importers, and ultra-loose Bank of Japan's monetary policy.

Technical comment:
The daily chart is mixed as MACD is bullish, but stochastics is in a bearish mode.

Trading recommendations:
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 119.20. A break of that target will move the pair further downwards to 118.75. The pivot point stands at 120.05. 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 120.50 and the second target at 120.80.

Resistance levels:
120.50
120.80
121.45

Support levels:
119.20
118.75
118.30