USD/JPY pares early losses, turns flat near 107.70
- USD/JPY continues to have a hard time finding direction.
- S&P 500 futures turn negative on the day ahead of Wall Street's opening bell.
- Manufacturing PMI data will be featured in US economic docket.
The USD/JPY fell to a daily low of 107.40 during the early trading hours of the European session but easily recovered its losses. As of writing, the pair was virtually unchanged on a daily basis at 107.72. When looking at the daily chart, it becomes clear that the pair continues to move in a very tight horizontal channel since mid-May.
Wall Street looks to open in red
In the second half of the day, markets will be keeping a close eye on Wall Street's performance. Mass protests and riots in the US could cause major equity indexes to start the week on a negative note.
However, even if the market sentiment turns sour, the JPY and the USD are both likely to find demand as safe-haven currencies to force the pair to remain stuck in its range. At the moment, US stocks futures indexes are posting modest losses.
Later in the American session, the IHS Markit will release the final reading of its Manufacturing PMI data. More importantly, the ISM will publish its Manufacturing PMI, which is expected to recover to 43 in May from 41.5 in April. Ahead of these data, the US Dollar Index is registering small daily losses at 98.16.
Meanwhile, the Jibun Bank Manufacturing PMI in Japan came in at 38.4 in May as expected and was ignored by the market participants. The only data featured in the Japanese economic docket on Tuesday will be the annual Monetary Base.
Technical levels to watch for