Asian currencies gained, capping the best two-month advance since April, after reports showed factory production in Japan and South Korea beat economists’ estimates and confidence among U.S. consumers reached a one-year high.

The Bloomberg-JPMorgan Asia Dollar Index (ADXY), which tracks the region’s 10 most-traded currencies excluding the yen, rose 0.6 percent this month, adding to a 1.7 percent rally in January. Overseas investors bought $6.3 billion more equities than they sold in South Korea, Taiwan and Thailand in February, helping spur a bull run in Asian stocks, identified as a 20 percent increase from the previous low.

“The market is slowly removing the risk of a hard-landing scenario as economic data are holding up well and not keeling over,” said Matthew Huang, a strategist in Singapore at Macquarie Group Ltd. “You also have an easing in Europe’s funding stress, which is a risk-positive event.”

The yen may depreciate as much as 10 percent against the dollar if it closes weaker than its 21-month moving average after ending last week above a dollar-yen cloud level, according to Barclays Plc.

The Japanese currency, which strengthened 21 percent against the dollar in 2010 and 2011, may be reversing that trend as it has depreciated 5.3 percent this month. The yen last week weakened to 81.20 per dollar, above dollar-yen’s weekly ichimoku cloud top at 79.97 yen, and a close at the end of the month weaker than its 21-month moving average at 80.90 may propel the currency to decline to 88 per dollar, Jay Govender, a technical strategist at Barclays in New York, wrote in a note to clients.

“What we are looking for is a confirmation of the bear trend in yen,” Govender said in a telephone interview. “While we’ve had some upside traction in terms of dollar-yen, there are still a lot of things that need to be done.”