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Dow rallies as GBP/USD, US natural gas futures also rise
Technical analysis of the Dow, GBP/USD and US natural gas futures as they rise amid risk-on sentiment.
Macro Update
US equities rally: The S&P 500 (+1.02%), Nasdaq (+0.89%) and Dow (+1.62%) all closed higher, with the S&P 500 and Nasdaq recording their strongest monthly gains since 2020.
Earnings drive gains: Strong corporate results broadened the advance, led by a 10% surge in Alphabet and record highs for Caterpillar, while Eli Lilly gained after raising its outlook.
Mixed big tech reaction: Apple rose in extended trading after reporting record quarterly revenue of $111.2bn (+17% YoY), while Meta (-8.7%) and Microsoft (-3.9%) declined on concerns over AI-related spending.
Resilient US data: First-quarter GDP growth of 2.0% and historically low jobless claims supported sentiment, although inflation above 3% continues to complicate rate cut expectations.
Central banks turn cautious: The Fed, ECB, BoE and BoJ all held rates but maintained a hawkish bias as energy-driven inflation risks persist.
Yen intervention and oil focus: Japan intervened to support the yen, while oil prices remained elevated amid Middle East tensions, sustaining pressure on inflation and the global policy outlook.
Dow Jones rally resumes
The Dow Jones Industrial Average's sharp rally off its late April 48,709 low has taken it close to its April peak at 49,848. Were this level and the 18 February high at 49,897 to be overcome, the record high at 50,512 would be next in line.
Support may be found around the 28 April high at 49,381.
Short-term outlook: bullish while above the 29 April 48,708 low
Medium-term outlook: bullish while above the 29 April 48,708 low
Dow Jones daily candlestick chart
GBP/USD trades in 2-month highs
GBP/USD has resumed its ascent and is gunning for its 20 February high at $1.3644 and the 17 February peak at $1.3664 which may act as interim resistance. If not, the 11 February high at $1.3712 may be reached as well.
Support below sits between the recent highs at $1.3599-to-$1.3576.
Short-term outlook: bullish while above $1.3448, the 23 April low
Medium-term outlook: bullish now that a rise above the mid-April high at $1.3599 has occurred, provided that the 23 April low at $1.3448 underpins.
GBP/USD daily candlestick chart
US natural gas futures recover from 8-month lows
US natural gas futures are trading above their breached March-to-April downtrend line which, because of inverse polarity, now acts as a support line.
A rise above the 266.4 late April high may engage the mid-March lows at 269.8-to-287.7 in the first instance. If overcome, the 280 region may be eyed.
While no slip below the 30 April low at 248.2 is seen, further short-term upside pressure may be witnessed.
Short-term outlook: bullish while above the 30 April low at 248.2
Medium-term outlook: bearish while below the 7 April high at 271.8, a rise and daily chart close above this level would neutralise our forecast
US Natural gas daily candlestick chart
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