Dow, EUR/JPY weigh on key support as US natural gas futures slip

Macro Update

Global bonds endure a bruising month: The benchmark 10-year US Treasury yield held near 5.23%, its highest level since 2007, and was heading for a rise of almost 50 basis points in September, the largest monthly increase in about two years, as strained public finances, heavy debt issuance and elevated energy costs pointed to a structurally higher-yield environment.

Equities shrug off higher yields: Asian stocks advanced, led by a 2.1% rise in Japan’s Nikkei as AI-related shares followed a US semiconductor rally, while US and European futures edged higher as resilient earnings and enthusiasm for AI outweighed rising borrowing costs.

Oil steadies after sharp sell-off: Crude prices edged higher this morning after suffering steep losses on Tuesday, as signs of a substantial increase in supply weighed on the market.

Dollar strength widens: The greenback remained near a 16-month high against the euro and was on course for a monthly gain of around 2%, supported by solid US growth and rising Treasury yields, while sterling slipped towards $1.32 and the euro hovered near $1.13.

Gold heads for monthly decline: Bullion steadied near $4,180 an ounce but was down 6% in September, as expectations of higher US interest rates continued to reduce the appeal of the non-yielding asset.

Fed rate expectations remain elevated: New York Fed President John Williams said there was no need to rush into further rate increases, tempering expectations of an October move, although traders still saw a December hike as almost certain ahead of Wednesday’s core PCE inflation data.

Dow Jones hovers above key support

The Dow Jones Industrial Average remains under pressure but so far remains above its September 51,129 low.

If slipped through, the June low and 200-day simple moving average (SMA) at 50,240-to-49,914 may be reached next.

While support at 51,129 underpins, a bullish reversal may still unfold. In this case a rise above the 25 September high at 51,880 would need to be seen. If so, the 22 September high at 52,324 may be revisited and an important resistance zone made up of the 25 June high, late August and early September lows at 52,661-to-52,760.

Short-term outlook: bearish while below the 25 September high at 51.880

Medium-term outlook: neutral while above the 24 September 51,129 low, a fall through which would change the forecast to a bearish one

Dow Jones daily candlestick chart

EUR/JPY revisits mid-September low

EUR/JPY's slide has taken the cross close to its mid-September ¥177.37 low which has so far held as support.

Were it and the 30 September ¥177.34 intraday low to be slipped through, the November 2025 low at ¥175.71 may be next in line.

Minor resistance above the 17 September ¥178.47 low may be found between the August trough and the 11 September high at ¥179.38-to-¥179.54. The next higher ¥180.87 high seen last week and the 18 September peak at ¥181.55 would need to be exceeded for a bullish reversal to be formed.

Short-term outlook: bearish while below the 24 September ¥180.87 high

Medium-term outlook: neutral with a bearish bias while above the 30 September ¥177.34 low and below the 18 September high at ¥181.55

EUR/JPY daily candlestick chart

US natural gas futures come off 2 1/2 month high

US natural gas futures have come off last week's 318.5 high and are trading back along the 200-day simple moving average (SMA) at 292.2 whilst so far being supported by the June low and 23 July high at 289.4-to-286.2. This zone lies marginally above the late August-to-early September highs at 286.0-to-285.7 which are likely to act as support, if revisited. If slid through, the August-to-September uptrend line at 273.8 may be back in view.

Minor resistance may be spotted around the 24 June low at 297.2 and the 30 June-to-6 July lows at 300.0-to-301.6.

Only a currently unexpected rally to above the September peak at 318.5 may engage the July high at 320.7 and the June peak at 323.8.

Short-term outlook: bearish while below the 28 September high at 306.2

Medium-term outlook: neutral with a bullish bias while above the 22 September low at 270.0

US natural gas daily candlestick chart