Dow hits record high as EUR/JPY grinds higher and US natural gas prices drop
Technical analysis of the Dow Jones Industrial Average as it hits a record high while EUR/JPY grinds higher and US natural gas prices drop.
Macro update
US equities set new records:
The S&P 500 posted its first record closing high since October, rising 0.21%, while the Dow also finished at a fresh peak, supported by a rotation away from richly valued AI stocks following the Federal Reserve’s (Fed) rate cut.
Rotation beneath the surface:
Financials and materials led advances within the S&P 500, while technology shares declined, leaving the index trading at around 22 times forward earnings - down from October but still above its 10-year average.
Tech remains dominant year to date:
Despite the recent shift, the Nasdaq 100 is still up more than 22% this year, comfortably ahead of the S&P 500’s roughly 17% gain, highlighting the continued leadership of large-cap technology in 2025.
Broadcom weighs on AI sentiment:
Broadcom forecast stronger-than-expected revenue but cautioned that quarterly margins would weaken, pushing the stock about 5% lower in after-hours trade and adding to broader caution around AI-linked names.
Japan tracks Wall Street higher:
The Nikkei 225 climbed 1.4% and the Topix closed at a record high, extending weekly gains as investors welcomed the Fed’s move while shifting focus to the Bank of Japan’s (BoJ) decision next week.
Commodities and macro backdrop:
Copper prices hit record highs on hopes of further Chinese stimulus and a softer US dollar, while Asian equities advanced broadly even as lingering AI bubble concerns tempered enthusiasm for tech stocks.
Dow Jones trades in record highs
The Dow Jones Industrial Average is fast approaching the 49,000 region, above which beckons the psychological 50,000 mark.
Minor support can be spotted at the previous November high at 48,431.
Short-term outlook: bullish while above the 10 December low at 47,463
Medium-term outlook: bullish while above the 14 October low at 45,452, targeting the 50,000 region
Dow Jones daily candlestick chart
EUR/JPY grinds higher
EUR/JPY is seen pushing towards the ¥183.00 region, now that it has taken out the (synthetic) June 1972 low at ¥182.47.
The next technical upside target is the December 1981 low at ¥186.41.
Immediate support sits at ¥182.00-to-¥181.88.
Short-term outlook: bullish while above the November-to-December support line at ¥181.14
Medium-term outlook: bullish while above the 21 November low at ¥179.78
EUR/JPY daily candlestick chart
Natural gas futures drop to six-week low
US natural gas futures have rapidly come off their 5 December 494.9 record high and slid to a six-week low at 370.7 around which they may find short-term support.
If not, the 55-day simple moving average (SMA) at 357.8 may be reached.
Minor resistance is likely to be encountered in the 400.0 region.
Short-term outlook: bearish but may find short-term support in the 370 region; if not, the 350 area may be revisited
Medium-term outlook: neutral with a bearish bias while below the 450 zone
Natural gas daily candlestick chart
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