FXStreet (Mumbai) - The USD/JPY pair gained momentum in early European session to clock a 2-1/2 month high of 121.84 levels. Markets pricing Fed rate hike? Most assets vulnerable to the rise in the borrowing costs in the US are falling against the USD. Gold prices neared USD 1100 handle, while the USD is advancing across the board. The USD/JPY pair is no different, as it clocked a high of 121.84; its highest since Aug 24. Still, the gains in the USD are somewhat restricted by the comatose 2-yr treasury yield. Ahead in the day, the spot could rise even further in case the 2-yr treasury yield starts rising. USD/JPY Technical Levels At 121.77, the immediate resistance is located at 122.12 (61.8% of 125.85-116.08), above which a major resistance is seen at 123.01 (July 27 low). On the other hand, a failure to sustain above 100-DMA at 121.76 could drive the pair back to 121.08. For more information, read our latest forex news.