USD/JPY distanced from two-week lows

US dollar managed to rebound from two-week lows against the Japanese currency on Wednesday, following the sharp decline yesterday, as tension in the Middle East continued giving support to safe haven assets.

USD/JPY climbed to a session high at 97.50 at 7:34 GMT, after having fallen below the psychological 97.00 level earlier. Consolidation followed at 97.47, still up by 0.43% for the day. Support for the pair was expected at August 7th low, 96.31, while resistance was to be encountered in the area around 98.25.

Japanese yen was the most supported currency yesterday, after concerns appeared that the United States may consider a military intervention against the Syrian government. Yesterday the US Defense Secretary Chuck Hagel said American forces were “ready” to commence their offensive, if the White House called upon such action. In addition, the US Vice-President Joe Biden said on Tuesday there was “no doubt” that the government in Syria had unleashed chemical weapons upon civilians and that it must be held liable.

Washington Post reported on Tuesday that the US government was planning to present evidence that a chemical attack on the population indeed happened, as this was scheduled as early as this Thursday. According to the media, this was one of the final steps before the United States declared a military action in the region. The UK, France and Turkey had already agreed to support a possible campaign in Syria. The government in the Middle Eastern country, however, claimed that local rebels stood behind the chemical attack on Damascus last Wednesday, as the number of civilian casulties was still a matter of speculation.

Meanwhile, the greenback received additional support after on Tuesday the Conference Board reported that US index of consumer confidence has risen unexpectedly in August, reaching a value of 81.5 up from 81.0 in July, confounding expectations of a drop to 79.0. Augusts reading was the highest since January 2008. This data eased concerns over the timing of Federal Reserve Banks stimulus scale back.

Elsewhere, the Japanese yen was losing ground against the euro as well, with EUR/JPY cross advancing 0.33% on a daily basis to trade at 130.40 at 8:03 GMT.