The dollar hovered at fresh 12-1/2 year highs against the yen early on Tuesday, having extended a bullish run after a recent break through of tough resistance fueled buying momentum. Dollar bulls also appeared to have latched onto a survey showing a pick up in U.S. manufacturing activity and construction spending, while discounting less upbeat data on consumer spending.
The greenback came within a whisker of 125.00 yen JPY=, reaching highs not seen since late 2002. It last traded at 124.90. Momentum turned bullish for the dollar after it cracked a double-top resistance around 122.00 yen last week. The next chart hurdle is seen around 125.65-125.73, an area that capped the dollar back in the final months of 2002.
“Despite the speed of the move, we are not looking to fade it – our end year target is still 132,” said Elsa Lignos, senior currency strategist, at RBC Capital Markets. The euro eased to $1.0928 EUR=, having fallen as low as $1.0887 overnight as it continued to retreat from last week’s peak of $1.1006.