Bank of America Merrill Lynch Research discusses USD/JPY outlook and notes that with a wedge bottom forming, USD/JPY continues to prod the bottom of the daily Ichimoku cloud.
"While most trend conditions remain bearish, aggressive shorts could enter at this resistance area; however, we are cognizant that the wedge bottom and rising MACD point to a tactical rally into the cloud, such as the mid- to upper-108s.
USD/JPY above support at 106.57 maintains a tactically bullish tone. We think the wedge would fail if spot fell below 106.02. Both of these levels are lines that are part of the Ichimoku cloud indicator," BofMAL argues.