Dow drops towards key support as EUR/JPY pauses its ascent and natural gas rises
Technical analysis of the Dow as it drops towards key support while EUR/JPY pauses its ascent and natural gas prices rise.
Macro update
Asian equities drop sharply:
Regional markets slid, with the Nikkei 225 and MSCI Asia-Pacific both falling more than 2% as the latest US jobs report offered little clarity on the Federal Reserve’s (Fed) near-term rate path.
Global tech slump deepens:
US technology stocks sold off despite Nvidia’s upbeat outlook, leaving the Nasdaq with its widest intraday swing since early April and pulling European equity futures notably lower.
Uncertain US rate outlook:
Solid September payroll gains were offset by a rise in unemployment and downward revisions, pushing Treasury yields lower as traders lifted the probability of a December Fed cut to around 40%.
Japan rolls out stimulus:
Prime Minister Takaichi announced a ¥21.3 trillion support package, pressuring the yen and JGBs before yields eased on guidance that bond issuance will be smaller than last year.
BOJ tightening pressure mounts:
Core inflation in Japan rose to 3% in October, fuelling expectations of an imminent rate hike, while officials warned they may intervene in FX markets as the Japanese yen trades near a 10-month low.
Commodities weaken:
Oil extended its decline on hopes of progress in Russia-Ukraine peace talks, while gold eased from recent highs as safe-haven flows shifted toward the yen rather than precious metals.
Dow Jones drops towards key support
The Dow Jones Industrial Average swiftly reversed Thursday's gap higher and is seen falling towards its key October 45,452 low.
Were it to be slid through on a daily chart closing basis, a medium-term top may be formed with the July highs and September low at 44,948-to-44,855 being in sight.
For the bulls to be back in control, a rise above Thursday's high at 46,856 needs to be seen.
Dow Jones daily candlestick chart
EUR/JPY pauses its ascent
EUR/JPY is seen coming off its ¥182.00 multi-decade high and is about to test its one-month uptrend line at ¥180.60. Together with the ¥179.98 14 November high it may act as support. If not, the 14 November low at ¥178.98 may be revisited as well. While above it, the short-term uptrend is deemed to be intact.
Resistance may be found around this week's ¥182.00 high, a rise above which would likely engage the (synthetic) June 1972 low at ¥182.47.
EUR/JPY daily candlestick chart
Natural gas futures rally towards November peak
US natural gas futures resumed their ascent and are heading towards their 13 November peak at $416.30. If overcome, the $485.00 October 2021 high may be next in line.
Support below the uptrend line can be found at the 18 November $375.60 low.
Natural gas daily candlestick chart
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