Dow, GBP/USD rallies lose upside momentum while US natural gas futures stabilise
Technical analysis of the Dow and GBP/USD as they lose upside momentum while US natural gas futures stabilise.
Macro Update
Asia equities steady after rally: Stocks paused on Friday, with MSCI Asia-Pacific ex-Japan down 0.8%, though the region remains on track for a second weekly gain and has largely recovered losses from the Iran war.
Oil holds below $100: Brent eased to around $94 as ceasefire hopes and potential US-Iran talks reduced supply concerns, although the Strait of Hormuz remains largely shut.
Netflix falls despite earnings beat: Shares dropped around 8% after hours as weaker-than-expected second-quarter guidance overshadowed a first-quarter beat and news that co-founder Reed Hastings will step down from the board in June.
Dollar weakens on reduced safe-haven demand: The dollar index hovered near six-week lows and is set for a second weekly decline, while the euro and sterling remained close to recent highs.
Gold steady despite easing inflation fears: Prices were little changed but are heading for a fourth consecutive weekly gain, supported by geopolitical uncertainty even as lower oil prices eased inflation concerns.
Markets seen as complacent on risks: Analysts warn equities may be underpricing growth and inflation risks if the conflict persists, with attention focused on reopening the Strait of Hormuz as a key catalyst.
Dow Jones rally loses upside momentum
The Dow Jone Industrial Average's sharp rally off its late March low has so far taken it to this week's 48,709 high below which it may short-term consolidate with the 9 April high at 48,324 being revisited. Further minor support may be found around the 10 March high at 48,220.
A rise above 48,709 would push the mid-February low at 49,084 to the fore.
Short-term outlook: bullish while above the 13 April 47,506 low
Medium-term outlook: bullish while above the 31 March 45,057 low
Dow Jones daily candlestick chart
GBP/USD rally stalls
GBP/USD's swift two-week advance is taking a breather marginally below the $1.3600 mark as the US dollar stabilises.
While Thursday's high at $1.3595 caps, it is possible that the 10 March-to-8 April highs at 1.3484-to-$1.8483 may be revisited. Further down meanders the 200-day simple moving average (SMA) at $1.3410 which could also offer support.
On a break above $1.3595 the mid-June 2025 high at $1.3632 would likely be engaged.
Short-term outlook: consolidating below this week's $1.3595 high
Medium-term outlook: neutral while above the $1.3160 late March low but below the 23 March high at $1.3479
GBP/USD daily candlestick chart
US natural gas futures prices continue to slide
US natural gas futures have been drifting lower since March and seems to have found an interim low at Tuesday's 240.4 low from where a minor recovery phase has been slowly building.
Resistance is likely to be encountered around the 253.3 late February low, though. As long as the next higher 265.9 18 February high isn't overcome, a fall through the 240.4 low remains on the cards with the August low at 236.7 being eyed.
Short-term outlook: bearish while below the 7 April high at 271.8
Medium-term outlook: bearish while below the 9 March high at 322.9
US natural gas daily candlestick chart
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