TOKYO: The dollar crept closer to a fresh seven-year high above 120 yen on Wednesday as a batch of encouraging US data showed the world's largest economy continues to improve.
In Tokyo midday trading, the greenback rose to 119.38 yen, from 119.22 yen, hovering around its highest level since mid-2007. The dollar last broke the 120 yen level in July 2007.
The yen has been under pressure after Moody's on Monday lowered its credit rating on Japan's sovereign debt and later its outlook on five Japanese commercial banks.
"It wouldn't be a surprise" if the pair tests the 120 mark later this week, said Yuzo Sakai, manager of FX business promotion at Tokyo Forex & Ueda Harlow.
"Investors may lack a sense of accomplishment until the pair hits 120," he told Dow Jones Newswires.
In other trading, the euro strengthened to $1.2386 and 147.86 yen against $1.2381 and 147.62 yen in US trade.
On Tuesday, the US Commerce Department said construction spending rose 1.1 percent in September, almost twice as much as expected, while industry specialist AutoData said the car industry saw a healthy 4.6 percent increase in sales last month.
US online sales also rose 16 percent year on year on Monday, according to the Adobe 2014 Digital Index.
The estimate for Cyber Monday, often seen as the annual high point for online retail, helped offset disappointing data on the "Black Friday" kickoff to the holiday shopping season.
Traders were also focused on Thursday's European Central Bank meeting after officials dampened speculation of fresh easing measures to counter the threat of deflation in the eurozone.
"The euro has been stable of late, mainly on the back of falling expectations of the ECB considering a more aggressive monetary policy stance as soon as this week," Credit Agricole said.
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