US Confidence Hits 5 Year High, US Dollar Soars- Christopher Vecchio, Currency Analyst at DailyFX

"Continuing the trend from the end of last week, the US Dollar has surged to fresh session highs against the Euro and the Japanese Yen after the Conference Board's Consumer Confidence report for May showed that sentiment improved to its highest level since February 2008, when the index hit 76.4. A continued surge in home prices alongside US equity markets trading near all-time nominal highs has negated the impact of the payroll tax increase and budget sequestration on the US consumer, and with improvement in the report's Business Conditions, Employment, and Income sub-indexes, there now is another tally in the Fed's column to “Reduce QE3.” Further gains in the USDJPY at this point are in question, however. The USDJPY rallied back towards its Thursday swing high at ¥102.55/60, but has yet to break this level at the time of writing. A noted three-wave decline off of the high set on Wednesday following the Bernanke testimony, at 103.73, suggests that a break of the 102.55/60 level would indicate that the decline is complete. Accordingly, should price base above 102.55/60 by the end of Tuesday, further gains pointing to new highs near 104.20 shouldn't be ruled out this week. On the flipside, if price is contained below Thursday's key swing level, a move back to the 8-EMA and former intraday resistance at 101.85/2.00 is likely before USDJPY bulls reenter the picture."