The U.S dollar gained strength against the yen on Monday, to trade at 12-year highs following the release of upbeat U.S. economic reports on manufacturing activity and construction spending. The dollar was boosted after the Institute of Supply Management’s manufacturing index accelerated in May, as new orders and employment both rebounded.
The ISM index of manufacturing activity was 52.8, up from 51.5 in April and ahead of forecasts for 52.0.
The employment index rose from 48.3 in April to 51.7 in March, while new orders were up from 53.5 to 55.8.
Another report showed that U.S. construction spending rose to the highest level in six-and-a-half years in April, adding to recent signs that the economy is rebounding from a weak first quarter.
The Commerce Department said construction spending jumped 2.2% to an annual rate of $1.0 trillion, the highest since November 2008.
The U.S economy continues to show strength and sign of recovery as improving data keeps emanating fundamentally. This is a good indication that rates would be hiked sooner than later.
Intraday bias remains bullish as 21 crosses 55 EMA upward. MACD and SSRC oscillator are also showing signs of bullish continuation in the pair. With 124.44 resistance being taken out, a retest to the resistance might occur and then bring further rise to 125.24 weekly resistance 1 in the short term picture.