USD/JPY hits fresh weekly highs near 114.30 as the dollar gains extend

• USD/JPY rises for the third straight day on Friday, eyes 114.50.
• The US dollar index hovers near 16-month highs amid Fed’s rate hike calls.
• Hot US CPI sends the dollar higher. Will Consumer Sentiment do that same?

USD/JPY is holding higher ground near nine-day tops of 114.31, as the bulls take a breather heading into the European open. At the time of writing, the pair trades at 114.24, up 0.165 on the day, headed for a weekly gain.

The renewed upside in the spot could be associated with the relentless appetite of the US dollar bulls, in the face of a hotter Consumer Price Index (CPI), which revived the odds of a Fed rate hike by mid-next year.

Rising inflation also fuels reflation trades, which boosts the sentiment around US Treasury yields, collaborating with the ongoing advance in USD/JPY. The benchmark 10-year US yields are currently trading at 1.57%, up 0.70% on the day.

On the yen-side of the equation, investors are digesting the latest draft of the Japanese economic stimulus package, with the JPY bulls little impressed by the lack of details on the size of spending.

The major now awaits the US Michigan Preliminary Consumer Sentiment data for fresh trading opportunities, with the gauge seen arriving at 72.4 in November vs. 71.7 previous.

USD/JPY technical levels to consider