Dollar falls against yen after more than 7 months high

NEW YORK (Reuters) - The dollar fell against the yen on Monday, as traders opted to take profits after the greenback climbing to its highest level in more than seven months.

The dollar, however, gained ground against the euro, with markets in the United Kingdom and much of the euro area closed for a holiday.

The dollar rose earlier to about 95 yen after strong U.S. jobs data Friday, which raised optimism about the U.S. economy and pushed yields on Treasury bonds.

The fall of the dollar against the Japanese currency fell after news on Monday that the U.S. service sector grew in March at its fastest pace in almost four years, while pending home sales unexpectedly rose in February.

"This is another clear sign that the recovery is reaching a self-sustaining momentum," said Alan Ruskin, currency strategist at RBS Global Banking & Markets, referring to the index of services of the Institute for Supply Management.

Later in the morning in New York, the dollar eased 0.2 percent to 94.43 yen. Earlier, it hit a high of 94.78 yen on electronic trading platform EBS, its highest since late August 2009.

But dealers said speculators trimmed their short yen positions to change their positions against the Japanese currency aggressively.

"The dollar / yen was the biggest beneficiary of the strong jobs data, but there is some reduction in the profits of the night," said Omer Eisner, an analyst at Travelex Global Business Payments in Washington.

"There's definitely some room for profit taking here, given the impressive rise of dollar / yen we have seen since late March," he added.

In general, trading volume was lower, because markets in Australia, New Zealand and China were also closed for a holiday.

Traders said the dollar will probably find a new resistance level at around 95.10 yen.

Meanwhile, the euro was down 0.1 percent at $ 1.3515.

The Institute for Supply Management (ISM by its acronym in English) said its index rose to 55.4 last month from a reading of 53.0 in February. The figure is above the 50 mark that separates growth from contraction and is the largest since May 2006.

Analysts polled by Reuters had expected a reading of 54.0 for the index in March.

"Something better than expected, and the ISM survey on manufacturing (last week), this will moderate the dollar a boost," said Joseph Trevisani, FXSolutions analyst in Saddle River, New Jersey.

In this report, there was another of the National Association of Realtors said its index of pending home sales, based on contracts signed in February, rose to 97.6 from an upwardly revised to 90.2 in January.

(Additional reporting by Satomi Noguchi in Tokyo)