USD/JPY gains on upbeat U.S retails sales figures

Better-than-expected U.S. retail sales gave the dollar a shot in the arm against the yen on Monday, rekindling sentiments that U.S. recovery is gaining steam after a rough winter and will keep the Federal Reserve on course to winding down stimulus programs this year.

In U.S. trading, USD/JPY was up 0.22% and trading at 101.84, up from a session low of 101.42 and off a high of 101.01.

The pair was expected to test support at 101.33, Friday's low, and resistance at 104.12, the high from April 4.

The Commerce Department reported earlier that U.S. retail sales rose 1.1% in March, exceeding expectations for a 0.8% gain. Retail sales in February were revised up to a 0.7% increase from a previously estimated 0.3% rise.

Core retail sales, which exclude automobiles, rose 0.7% last month, beating expectations for a 0.5% reading, after a 0.3% gain in February

Consumer demand drives the bulk of U.S. economic output, and the numbers fueled expectations that a slew of soft economic indicators hitting the wire earlier this year were the product of rough winter weather and not a softening of underlying demand.

The data also fueled sentiments that the Federal Reserve will continue to wind down its monthly asset-purchasing program as the year unfolds.

Fed asset purchases, currently standing at $55 billion a month, weaken the greenback by suppressing borrowing costs to spur recovery, though talk of waning monetary intervention often strengthens the U.S. currency.

Elsewhere in the U.S., data revealed U.S. business inventories rose less than expected.

In a report, Census Bureau reported earlier that U.S. business inventories rose 0.4% in February from 0.4% in the preceding month.

Analysts were expecting a 0.5% reading in February.

The yen, meanwhile, was up against the euro and up against the pound, with EUR/JPY down 0.24% at 140.77, and GBP/JPY trading up 0.25% at 170.47.

The euro slid after ECB President Mario Draghi said Saturday that further gains in the euro would trigger additional monetary easing to keep consumer prices in comfort zones.

'A strengthening of the exchange rate requires further monetary stimulus. That is an important dimension for our price stability,' he said.

On Tuesday, Fed Chair Janet Yellen is to speak; her comments will be closely watched.