Dow, EUR/JPY recover from multi-month lows as US natural gas slips
Technical analysis of the Dow Jones Industrial Average and EUR/JPY as they recover from multi-month lows while US natural gas futures are rejected from key resistance.
Macro Update
Asian stocks track Wall Street higher: MSCI’s Asia-Pacific index climbed 0.8% after the S&P 500 and Nasdaq 100 posted their strongest session since early August, with US equity futures pointing to further gains while European shares were set for a slightly weaker open.
Bank of Japan raises rates in split decision: Policymakers lifted the benchmark rate by 25 basis points to 1.25%, with two board members dissenting, sending the yen to around ¥157.20 per dollar and shifting focus to Governor Kazuo Ueda’s press conference.
Oil falls for a third consecutive session: Brent crude dropped 1.2% to around $103.50 a barrel as supply concerns eased and traders turned their attention to the next round of US-Iran diplomacy, helping to temper near-term inflation pressures.
Chipmakers rally on Nvidia outlook: Samsung Electronics, SK Hynix and other Asian semiconductor stocks advanced after Nvidia delivered an upbeat outlook, lifting sentiment across the sector.
Treasuries retain overnight gains: The 10-year Treasury yield held around 4.93% in Asian trading after falling nine basis points in New York as weaker oil prices eased inflation concerns, with Australian and New Zealand government bonds following the move.
Triple witching comes into focus: More than $2 trillion in notional value of stock, index and futures options is due to expire on Friday, potentially increasing market volatility as investors reposition ahead of the expiries.
Dow Jones recovers
The Dow Jones Industrial Average found support at Wednesday's 51,192 three-month low with the 10 September low at 51,968 possibly being retested. Another potential upside target lies at the 22 July high at 52,516. More significant resistance sits between the 25 June high, late August and early September lows at 52,661-to-52,760.
A fall through this week's low at 51,192 would have bearish implications which may lead to the June trough at 49,914 being back in sight.
Short-term outlook: bearish while below the 14 September high at 52,756
Medium-term outlook: neutral while above the 16 September 51,192 low, a fall through which would turn the outlook bearish
Dow Jones daily candlestick chart
EUR/JPY rallies
EUR/JPY's recent bounce off this week's ¥177.37 low turned into a rally following the Bank of Japan's (BOJ) decision to raise interest rates to levels seen 31-years ago.
Short-term outlook: bullish while above the 17 September ¥178.47 low
Medium-term outlook: neutral while above the 14 September ¥177.37 low
EUR/JPY daily candlestick chart
US natural gas futures come off resistance
US natural gas futures have once more been rejected by their recent 285.7-to-286.5 resistance area and are seen slipping towards the 55-day simple moving average (SMA) at 273.5. If fallen through, the early-to-mid-August highs and the August-to-September support line at 270.1-to-268.7 may be revisited. Further down lies the 10 September low at 270.8.
A currently unexpected break through the key 285.7-to-286.0 resistance area would engage the 23 July high at 289.4, arise above which would eye the 200-day simple moving average (SMA) at 293.8.
Short-term outlook: bearish while below the major 285.7-to-286.0 recent highs
Medium-term outlook: neutral with a bearish undertone while below the 23 July high at 289.4
US natural gas daily candlestick chart
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