Yes, conditionals can be used inside the then block of a FEEL/Literal expression in DMN.
The problem you are experiencing is that { } in FEEL is used to denote a context, while you possibly wanted to use () to parenthesise part of your expression.
In other words, you expression should be ~like:
if somecondition
then ( if (newcondition) then ... else ... )
else ( if (another condition) then ... else ... )
For example:
if a number > 0
then ( if modulo(a number, 2) = 0 then "pos even" else "pos odd" )
else "neg"
Demo:
