DOW, EUR/JPY hover above support as US natural gas comes off 3-month high

Macro Update

Asian equities retreat amid AI financing concerns: Fears over the cost of funding AI investment and persistently high energy prices left Asia-Pacific shares excluding Japan down 0.16%, with the index on track for a weekly loss of more than 1%. Japan’s Nikkei fell over 1%, while SoftBank slid 5.4% after reports that OpenAI’s annualised revenue was $20bn below earlier indications.

Wall Street splits as chip stocks slide: The Nasdaq fell 1.25% to 27,193.34 and the S&P 500 shed 0.47% to 7,765.36, while the Dow edged up 0.10% to 51,231.64. Semiconductor shares dropped 3.4%, with Broadcom and Oracle losing more than 4% amid concerns over debt-funded AI spending.

Oil prices ease on hopes of US-Iran talks: Brent crude fell 1.3% to $102.91 a barrel, while WTI slipped to $90.40 after Donald Trump said the US would not attack Iran before the midterm elections and described negotiations as productive. However, Hurricane Isaias had shut in around 62.9% of Gulf of Mexico oil output, leaving Brent on course for a weekly gain.

Euro faces fifth consecutive weekly decline: The single currency recovered to $1.1226 from a 17-month low of $1.1161 as French bond markets stabilised and US Treasury yields eased. Nevertheless, the euro remained down more than 3% over five weeks amid concerns over French debt and social unrest.

Gold rebounds as dollar and Treasury yields retreat: Spot gold climbed 1.1% to $4,177.44 an ounce after hitting a two-month low on Wednesday, supported by a weaker dollar and falling bond yields. Meanwhile, the CME FedWatch tool indicated an 83% probability of a Federal Reserve rate hike in December.

Global bond sell-off keeps yields near multi-decade peaks: The US 10-year Treasury yield held at 5.226%, close to a 24-year high, as rising energy costs, expectations of further rate hikes and mounting government debt sustained pressure on global bond markets. France remained particularly vulnerable ahead of next year’s presidential election.

Dow Jones bounces off support

The Dow Jones Industrial Average remains under pressure but so far remains above its early October 50,552 low.

If slipped through, the June low and 200-day simple moving average (SMA) at 50,343-to-49,914 may be reached next.

While support at 50,552 underpins, a bullish reversal may still unfold. In this case a break through the September-to-October resistance line at 51,391 and rise above the 6 October 51,677 high would need to be seen. If so, the 25 September high at 51,880 may be reached and, if overcome, the 22 September high at 52,324 too. Then the index would encounter an important resistance zone consisting of the 25 June high, late August and early September lows at 52,661-to-52,760.

Short-term outlook: neutral with a slight bullish stance while the 1 October low at 50,552 underpins

Medium-term outlook: bearish while below the 25 September high at 51,880

Dow Jones daily candlestick chart

EUR/JPY tries to recover

EUR/JPY's slide has taken the cross not far below its mid-September ¥177.37 low, to ¥176.22, which has so far held as support.

Were it to be slipped through, though, the November 2025 low at ¥175.71 may be reached.

On the flip side a rise above the 6 October ¥178.33 high would likely lead to the 17 September ¥178.47 low being reached, a rise above which may engage the August trough, 11 September and 1 October highs at ¥179.38-to-¥179.54.

Short-term outlook: neutral with a bearish undertone while below the 1 October ¥179.31 high

Medium-term outlook: neutral with a bearish bias while above the 5 October ¥176.22 low and below the 18 September high at ¥181.55

EUR/JPY daily candlestick chart

US natural gas futures come off 3 month high

US natural gas futures are seen coming off Thursday's 318.8 high, made marginally above the September 318.5 peak, and are slipping towards the 300 region and the September-to-October support line at 296.2.

Further minor potential support is found around the 200-day simple moving average (SMA) at 289.0 and the key 286.0-to-285.3 support zone. It contains the late August to mid-September highs and the early October trough.

Only a rally above the September and current October peaks at 318.5-to-318.8 may lead to the July high at 320.7 and the June peak at 323.8 being reached.

Short-term outlook: toppish while below the 8 October high at 318.8

Medium-term outlook: bullish while above the 22 September low at 270.0

US natural gas daily candlestick chart