USD/JPY down to session lows on safe haven demand

US dollar was losing ground against the Japanese yen on Tuesday, because of concerns that the United States might consider a military intervention in Syria, which strenghtened demand for traditional safe haven assets, such as the yen.

USD/JPY took a slide to its lowest point during Tuesday trade at 97.77 at 7:55 GMT, also the pairs lowest since August 22nd, after which consolidation followed at 97.85, still losing 0.68% on a daily basis. Support was likely to be found at August 27th low, 97.57, while resistance was to be encountered at August 26th high, 98.83.

Japanese currency received a boost against all of its 16 major counterparts, after US Secretary of State John Kerry said that President Barack Obama will hold Syrian government accountable for the “moral obscenity” of using chemical weapons. This caused investors to abandon higher-risk assets and to seek safe haven currencies, such as the yen, which tends to find strength during periods of financial and economic turmoil, because Japan does not rely on foreign capital to fund its deficits.

“Concerns about developing nations are damping market sentiment,” said Marito Ueda, the senior managing director at FX Prime Corp. (8711), a currency-margin company in Tokyo, cited by Bloomberg. Given these circumstances, “investors are reluctant to sell the yen.”

In the mean time, the lack of clarity over when the Federal Reserve Bank will begin tapering its easing program was still present, after on Monday it became clear that durable goods orders in the United States dropped by 7.3% to 226.3 billion USD in July, while the median estimate pointed a lesser decrease, by 4.0%, as this data raised concerns over domestic demand.

Elsewhere, the yen was advancing against the euro and the pound, with EUR/JPY cross tumbling 0.59% for the day to trade at 130.94 at 7:54 GMT and GBP/JPY pair plunging 0.96% on a daily basis to 152.01 at 7:55 GMT.