The dollar/yen pair continues to trade within the 107th figure, where it has been since the end of June. The Japanese currency ignores its own fundamental factors and poorly reacts to the external fundamental background, while the greenback demonstrates a passive position amid unstable demand. A slight volatility can be found in the pair – the price rises quite smoothly to the top of the price niche, and then returns quite smoothly - either to the middle of the range, or to its base. On the one hand, being passive is a disadvantage for the pair – the price chaotically reacts to the current news flow, and to be more precise, to the spikes and declines of anti-risk sentiment in the market. On the other hand, the USD/JPY pair steadily fluctuates in a given range in the medium term, allowing traders to make decisions in time: at the upper border of the band, go into sales, and at the lower, respectively, into purchases.

But if we consider a broader price range (for example, on the weekly chart), we will see that the pair shows an upward trend from the three-month June low of 106.09. Despite deep pullbacks and multi-day flat periods, the price is gradually going up, reflecting the US currency's dominance.

Here it is worth noting that the pair reacts to external fundamental factors somewhat differently than other dollar pairs. Both the dollar and the yen are safe-haven currencies, so they experience the same pressure (or vice versa – enjoy the same support) in the event of an increase in risk sentiment, or a surge in anti-risk sentiment. In the context of the dollar-yen pair, some fundamental factors that are important for other dollar pairs simply do not work or work differently than in other dollar pairs.

For example, investors currently focus all of their attention on the coronavirus. The decline in the spread of COVID-19 around the world supports USD/JPY and vice versa – the next antirecords put pressure on the pair. In particular, the daily growth of cases in the world steadily slowed down for five days (until July 7). This fact made it possible for USD/JPY bulls to develop their offensive amid weakening anti-risk sentiment.

In addition, the pair's growth was also supported by the positive dynamics of many macroeconomic indicators - both in Europe and in the US. For example, the published indicator of orders in the German industry came out of the negative area (where it had been for the previous three months) and reached a ten percent increase on a monthly basis. For comparison, there was a decline of almost 30% in the previous month. We were also pleased with US data: the ISM composite index for the non-manufacturing sector came out in the green zone, rising to 57 points in June. The indicator shows an upward trend for the second consecutive month. The UK construction sector PMI was also published, which was also much better than expected. All these messages, which signal a gradual recovery of the world's key economies, caused a risk appetite, and the dollar rose against the yen (while the greenback showed weakness in other pairs).

But today's data were on the side of the Japanese currency. The daily incidence of coronavirus crossed the mark of 200,000 once again. The highest number of new patients were found in the United States on July 7 – over 55,000. It is worth noting that this figure has consistently exceeded the 45,000 mark in the United States since the end of June. But in recent days, antirecords have been reported (55-57,000 new cases per day). Then the sad rating looks like this: 48,500 cases in Brazil (where the president of the country was infected), more than 23,000 in India, around 10,000 in South Africa, 6,300 in Russia and almost 5,000 in Mexico.

The threat of repeated global quarantine has been putting pressure on the markets since May, that is, since the time when key countries of the world began to relax restrictive measures. Therefore, the above dynamics returned a certain interest in the yen as a defensive asset. And although one cannot speak of a downward rally here, the USD/JPY bulls were forced to interrupt their offensive, which could result in the assault on the 108th figure.

Thus, the situation for the pair is ambiguous. If we consider short-term and medium-term prospects, then it is necessary to focus on the current news flow, first of all, regarding the distribution rate of COVID-19. If we consider the long-term period, then the priority is for purchases - the pair has been demonstrating an upward trend over the past three weeks, gaining almost 200 points.

If we talk about the situation within the day here, we move on to the four-hour chart. The price reached the middle line of the Bollinger Bands indicator and slowed down. This suggests that the bears are buried in the level of support, which can extinguish the downard momentum. Therefore, you are advised to consider short positions when overcoming this target, that is, when consolidating below 107.50. In this case, you can consider sales with the target of 107.15 (the lower border of the Kumo cloud at H4).