US session review: Yen rises

Data released: 

14:00 GMT USA Consumer Confidence (Aug) 81.5 80.3 81.0 

14:00 GMT USA Richmond Fed Manufacturing Index (Aug) 14 _ -11 

The safe-haven yen and Swiss franc gained on Tuesday and riskier currencies like the Australian and New Zealand dollars fell as geopolitical tensions rose with Western countries poised to take military action against the Syrian government. 

Economic reports such as an upbeat German business sentiment survey have largely been ignored with investors focused on conflict in the Middle East. 

Western powers told the Syrian opposition to expect a strike against President Bashar al-Assad's forces within days. 

German, U.S. and British government bond prices all rose as money flowed into safe-haven markets. 

Washington said on Monday it believed Syrian President Bashar al-Assad was responsible for a chemical weapons attack on civilians last week. 

The rising tension stemming from Syria overshadowed the impact from positive data from the euro zone and United States. The IFO German confidence survey showed business sentiment was at its highest level in 16 months but that had only a fleeting impact on the euro. 

In the United States, consumer confidence improved this month, while home prices rose in June on a seasonally adjusted basis. 

ЕURO 

Eurozone data momentum remains sufficiently encouraging for the likes of ECB’s Nowotny to douse rate cut talk and the EZ current account surplus aids the euro when capital flows are still seasonally light. 

EUR/USD gets closer to $1.3400 in a volatile session. Further rise may be capped by the resistance at $1.3450 (Aug 20 high) and $1.3520 (Feb 13 high) extending to $1.3540 (channel resistance line from Jul 10). Initial support comes at $1.3320 (daily lows) and $1.3200/90 (Feb 22 lows). 

POUND 

The pound remain under pressure. 

GBP/USD remains within the downward channel from Aug 21, limited today by $1.5560 - $1.5430 (strong resistance and support respectively). Above $1.5560 resistance is near $1.5610/40 (Aug 26 and 23 respectively) and $1.5715 (Aug 21 high). Initial support comes at $1.5480 (daily lows) and below - at $1.5430 (channel line). 

YEN 

The yen strengthened for a second day against the dollar and euro as a slide in emerging-market currencies boosted demand for safer investments. 

The yen has strengthened 3.9% in the past three months. 

USD/JPY failed to hold above the support at Y97.80 (61.8% Fibo of the Y96.90 - Y99.10 move) and fell close to Y97.00. Below rate may challenge Y96.50 (channel line from Jun 13 and the lower bound on the 4-hour charts). Break under may open the way to the channel line from Jul 8 at Y95.00/Y94.90. Meanwhile, back above Y97.80 rate may recover to Y98.30. Key resistance is around Y99.00 (channel line from Jul 8). 

DATA AHEAD: 

There is no key data for today.

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