TOKYO (AFX-ASIA) - The dollar was firmer against the yen in midafternoon trading after continued short-covering in the wake of recent positive US data, dealers said. The US Labor Department said on Friday that nonfarm employment rose by 41,000 in May from the previous month, marking the biggest increase in since February 2001, and the second straight monthly increase following 12 consecutive monthly declines. Underlying worries over possible intervention by Japanese authorities also continued to discourage investors and speculators from immediately retesting the dollar's downside, dealers said. Minoru Shioiri, foreign exchange manager at Kokusai Securities, said he expects the US currency to maintain a recovery trend this week, citing improved US economic data. "The key is whether the unit can break through the 125.40 yen level," he said, adding that "a break of this level may allow the currency to move past the mid-126 yen level." "But if the US capital markets, despite the positive economic data, are to maintain their bearish movement, the dollar may be able to break through even the 125 yen level." Relatively large sell orders by Japanese market participants, including exporters, prevented the dollar from rallying past the 125 yen level today, dealers said. The euro was lower against the dollar due to continued profit-taking following the prolonged rally, with the release of positive economic data in the US also adding to the consolidation of the European currency, dealers said. "But it seems that European investors are still willing to repatriate their funds invested in the US capital markets, which will continue to discourage sentiment towards the dollar," Shioiri said.