FOREX-Yen struggles vs euro, dollar as Syria tensions subside
* Yen close to 7-week low vs dollar, multi-month low vs euro
* Obama speech reduces chances of US strike against Syria
* Next week's Fed meeting in focus as mkts await stimulus trim
* Solid Chinese data raises hopes of recovery in China
By Anooja Debnath
LONDON, Sept 11 (Reuters) - The yen traded close to a seven-week trough against the dollar and a more than three-month low versus the euro on Wednesday as an easing in international tensions over Syria prompted investors to seek higher-yielding assets.
Although the rapid rise in the euro and the dollar against the yen triggered some profit taking which saw both pairs come off their recent highs, analysts said that improving risk sentiment meant the yen would probably remain under pressure.
U.S. President Barack Obama pledged on Tuesday to explore a diplomatic plan from Russia to take away Syria's chemical weapons, although he voiced scepticism about it and urged Americans to support his threat to use military force if needed.
With an imminent U.S. military strike on Syria now looking unlikely investors sold the yen, which is seen as a safe haven during times of crisis, pushing the dollar to a peak of 100.62 yen on Wednesday, its highest level since July 22.
Also helping risk currencies against the yen, was a string of solid data out of China this week that reinforced signs that the world's No. 2 economy is stabilizing after slowing for more than two years.
By 1108 GMT on Wednesday the dollar was flat at 100.33 yen and analysts said the dollar would likely hold above the 100 yen level in coming sessions.
"It is a combination of things... tensions in Syria, which had been negative for risk-assets and supported the yen, have eased a bit. Also global economic data over the last couple of weeks has been relatively good," said Paul Robson, currency strategist at RBS Global Banking.
The euro was down 0.2 percent at 133.01 yen, having hit a an intra-day peak of 133.375 yen which was its highest since May 22 when it hit 133.82 yen.
Crossing that mark would take it to its highest since January 2010. Against sterling the Japanese currency hit a four-year low of 158.46 yen.
Traders said the Syria situation would probably now be less of a focus and markets will now turn their attention to next week's U.S. Federal Reserve meeting for more detail on the pace and timing of the central bank's plans to pare its stimulus.
Although the U.S. jobs report last Friday fell short of market expectations, many investors expect the Fed to start reducing its bond-buying programme at next week's policy meeting, underpinning the dollar.
"Markets are positioned for the Fed to taper... any attempt to reduce stimulus from the current $85-billion-per-month will probably be done modestly," said Niels Christensen, FX strategist at Nordea.
A Reuters poll on Monday showed economists expect the Fed to announce a moderate reduction to its $85 billion monthly asset-buying programme by some $10 billion.
The euro was down 0.1 percent at $1.3257 but still well above the seven-week low of $1.31045 hit last Friday.
Although better-than-expected economic data and improving market sentiment has helped the single currency, analysts at Morgan Stanley warned, in a note to clients, the euro's strength could be short-lived and they remain sellers on any rallies.
"A break above the August high of (around) $1.3450 is unlikely, and we would look to sell around the $1.3320 level."
- WTO overcomes last minute hitch to reach its first global trade deal
- Colorado baker discriminated by denying gay couple wedding cake: judge
- Flights delayed as air pollution hits record in Shanghai
- U.S. freeze shows no sign of weekend melt after deadly storm
- Australia foreign minister downplays China air defense zone tension in visit