Following a slip to 110.90 in the Asian session, the USD/JPY pair recovered back above the 111 handle and has been moving in a relativly tight 30-pip range in the last few hours, awaiting the next catalyst. As of writing, the pair is trading at 111.20, still down 0.1% on the day.
The terrorist attack that took place in Manchester triggered a flight to safety earlier in the day, increasing the demand for the JPY, but the impact on the markets faded away as the European stock indexes recorded gains for the second day in a row.
On the other hand, the US Dollar Index is having a difficult time correcting its recent losses on Tuesday, staying dangerously close to its 6-month low of 96.70, which was set yesterday and tested earlier today as well. As of writing, the index is at 96.87, flat on the day. Later in the session, Markit will release the PMI numbers for the both the service and the manufacturing sectors in the United States. The expectations point to a slight expansion in the manufacturing sector.
The pair could face the immediate resistance at 111.60 (Monday high) ahead of 112.20 (100-DMA) and 113 (psychological level). To the downside, supports are located at 111.15 (200-DMA), 110.25 (May 18 low) and 109.60 (Apr. 25 low).