USD/JPY has continued to probe the upside to a fresh 6-week high head of ECB/US CPI

• USD/JPY bid as stocks climb –  The Dow has now extended its win streak to five sessions.
• USD/JPY battling with a major Fibonacci resistance, being the 61.8% retracement of its August decline.

USD/JPY has continued to probe the upside making a six-week high at 107.65 as it hunts down the trendline resistance and probes the  61.8% retracement of its August decline.

There has been very little happening ahead of the European Central Bank meeting and US Consumer Price Index on Thursday. However, risk sentiment remains elevated and the DJIA managed to pop a fifth consecutive high –    The Dow has now extended its win streak to five sessions, climbing 73.92 points, or 0.3%, to 26,909.43, while the S&P 500 index put up 0.96 points, or less than 0.1%, to 2,979.39. The Nasdaq Composite index  dropped back a modest 3.28 points, or less than 0.1%, to 8,084.15.

Stretched positioning, ECB and trade wars in focus

As for yields, the US 2-year Treasury yields climbed  from 1.60% to 1.68%, the 10’s  from 1.65% to 1.72%. “Possible causes are the China trade news overnight, the looming ECB meeting on Thursday, and stretched positioning (speculators’ 3mth Eurodollar futures bets on falling rates are at record highs). Markets are pricing 26bp of easing at the 19 September Fed meeting, and a terminal rate of 0.97% (Fed funds rate currently 2.13%),” analysts at Westpac argued.  

USD/JPY levels

Valeria Bednarik, the Chief analyst at FXStreet explained that the USD/JPY pair is trading near its daily high, battling with a major Fibonacci resistance, being the 61.8% retracement of its August decline:

“In the short-term, and according to the 4 hours chart, the pair still has chances of extending its advance, as it continues developing above all of its moving averages, with the 20 SMA extending its advance beyond the 100 and 200 SMA. The Momentum indicator extends its recovery from near-neutral levels, while the RSI continues consolidating around 70.”