On Friday, the US dollar index stayed near 16-month highs amid increasing bets on earlier Federal Reserve interest rate hikes, as investors await the preliminary reading of the University of Michigan's consumer sentiment Index and the US job openings data.
Earlier in the week, the US CPI exceeded expectations and rose 6.2% from October 2020, the highest increase in three decades, boosting inflationary pressures.
While the US stock markets are set for their first weekly decline since early October amid inflation concerns, traders remain focused on movements in the bond market as they closely watch the auction of 10-year Treasury notes later today, the first bond sale since the debt ceiling battle ended temporarily.
USD/JPY Battling One-Week High
USD/JPY continues to advance through its ten-day highs amid rising US Treasury yields due to higher inflation. The benchmark US 10-year yield is currently trading at 1.57%, trying to hold the ground above 1.50%.
From a technical perspective, the yen has developed a flag pattern over the past three weeks. According to the daily chart, buyers attempted to break above the one-week high of 114.270 and penetrate the pattern upside, pushing the rate higher toward a ten-day peak at 114.434.
Overcoming this obstacle could bring the pair back to its prior uptrend. A continuation of the bullish rally seems likely as long as the pair trades above the 114 mark, with the following hurdles at 114.434, 114,900, and 115,200.
Otherwise, the price will continue to move towards the lower line of the pattern if sellers return to the market. A break below 112,714 will mark the beginning of a downtrend.
Events of the day
A new trading opportunity will come with the US Michigan Preliminary Consumer Sentiment data release, expected to arrive at 72.4 in November, up from 71.7 previously.
Updated data will shed light on the US labor market with the September Job Openings and Labor Turnover Survey (JOLTs). The number of job openings in the US has likely decreased from 10.439 million in August to 10.3 million in September.