Good afternoon!

The dollar/yen pair showed a rise at the end of the previous trading week. However, due to the long upper shadow of the last candle and the unclear closing within the cloud of the Ichimoku indicator we cannot expect the further growth of the quote.

The Bank of Japan meeting that was held last week turned out to be rather disappointing. The regulator did not announce any new support measures. It has just extended the loan program. As a rule, market participants ignore such announcements. Thus, traders showed no reaction. It is quite possible that in the near future, the Bank of Japan will hardly expand its monetary policy and cut the key interest rate. That is why most traders are focused on the technical analysis of the dollar/yen pair. Let's take a look at it.

Weekly

As we have already mentioned at the beginning of the article, the last candle with its long upper shadow is rather unclear. The pair is still hovering near the strong technical level of 107.77. The Tenkan line of the Ichimoku indicator is slightly below the mentioned level. In fact, deals are opened within the two strong technical levels of 107.00 and 108.00. The previous week's high was logged on the level of 108.9 whereas the low recorded on May 18-22 was on the level of 107.07. I suppose that the break of one of the levels may determine the pair's trend.

At the same time, it is rather difficult to break the support of 108.09 as bears may face the 50-period simple moving average that is on level of 108.13. The SMA will hardly allow the pair to rise upper. At the same time, even if the pair breaks the support of 107.07, a development of the downtrend will be still under question. There is a strong technical level of 106.92. The Kijun line is on the level of 106.71 whereas 106.54 is a low logged several weeks ago.

I suppose that strong barriers above 108.09 and below 107.07 create uncertainty and prevent us from making an accurate forecast. The pair may need a strong driver to develop a clear trend.

Daily

When I was finishing the review, the dollar/yen pair inched up and was trading near the level of 107.73. It is quite possible that today, market will be rather calm due to a bank holiday in the UK and the US.

According to the technical analysis, the pair is trading within the daily Ichimoku cloud that is considered to be an uncertainty zone. The 50-period simple moving average and the 89-period exponential moving average prevent the quote from moving up as there is a resistance level of 108.09 above them. Besides, the pair may find a strong resistance level of 108.21 caused by an orange 144-period exponential moving average.

The Tenkan line acts as support above the level of 107.33. Next support levels have been described above.

Conclusion and trading recommendations for USD/JPY

I would like to emphasize that it is rather difficult to make trading decisions under the current conditions. Successful deals could be opened in both directions. However, I suppose that there are no clear signs to enter the market. Nevertheless, traders are recommended to open buy positions, if the price drops to 107.65-107.45. Sell deals could be initiated when candles appear near 107.85-108.05. That is all for now. In the coming days, we will return to the currency pair to find levels to enter the market.

Good luck!