The Japanese yen rallied against most of the major currencies during last week's trading session. EUR/JPY tumbled about 100 pips, causing the pair to hit a 7-week low. The yen gained about 100 pips against the British pound as well.

The yen strengthened last week as economic reports from the U.S. and the euro-zone have signaled that the global economic recovery is slowing. Reports showed that the unemployment situation in the U.S. continues to deteriorate, as 500,000 people have filed for unemployment insurance for the first time during the past week. The euro-zone has provided negative data as well, as the German ZEW Economic Sentiment report, which attempts to predict the economic outlook of Germany for the next 6 months, has declined for the 4th consecutive time.

The disappointing economic data from both the U.S. and the euro-zone are the main reason that concerns regarding the global economic recovery are taking place. These concerns are driving investors to open long position on the yen, which is considered to be a relatively safe investment. As long as the leading economies will continue to provide negative signals, the yen is likely to strengthen further.

As for this week, a batch of data is expected from the Japanese economy. Traders are advised to follow the Japanese Trade Balance and the Tokyo Core Consumer Price Index, as these reports tend to have a large impact on the yen.