Dow, GBP/USD consolidate while US natural gas prices eye resistance
Technical analysis of the Dow, GBP/USD as they consolidate while US natural gas futures prices near resistance.
Macro Update
Asia stocks rise on AI optimism: Asian equities advanced as investors looked through inflation and geopolitical risks, with enthusiasm around AI supporting tech-heavy markets and European futures signalling a stronger open.
Trump-Xi summit offers few surprises: Market reaction was subdued as initial comments from Xi suggested progress in trade discussions but warned that disagreements over Taiwan could place US-China relations on a dangerous trajectory.
Nikkei touches record high: Japan’s Nikkei reached a fresh peak, driven by gains in technology, semiconductor and electronic component shares, although the broader Topix edged lower as weak earnings weighed on parts of the market.
Dollar supported by rate hike bets: The dollar remained firm after stronger US inflation data increased expectations of a potential Fed rate hike, while Treasury yields stayed near recent highs.
Oil remains above $100: Brent traded near $102 and WTI above $100 as the Iran conflict continued to disrupt supply, with markets watching whether the Trump-Xi meeting could help ease tensions.
Yuan hits three-year high: China’s yuan strengthened to its highest level in three years ahead of the summit, while sterling remained under pressure from UK political turmoil and the yen found some support from hawkish Bank of Japan comments.
Dow Jones consolidates
The Dow Jones Industrial Average continues to consolidate below its 50,135 early May high, a rise above which would be expected to lead to a retest of the February peak at 50,513.
Were this week's low at 49,313 to give way, though, the late April-to-May lows at 48,861-to-48,709 may be revisited.
Short-term outlook: neutral with a bullish bias while above the 12 May 49,313 low
Medium-term outlook: bullish while above the 29 April 48,709 low
Dow Jones daily candlestick chart
GBP/USD holds above support
GBP/USD's slide amid political uncertainty in the UK found support at the 10 March-to-8 April highs at $1.3484-83, above the more significant $1.3454-to-$1.3448 late April lows.
While either of these support zones underpins, the cross remains potentially bullish, even though it has been range trading for over a month.
Resistance may be spotted around the 27 April high at $1.3576.
Short-term outlook: neutral with a bearish bias while below $1.3599 but above $1.3448
Medium-term outlook: neutral with a bullish undertone while the 23 April low at $1.3448 underpins
GBP/USD daily candlestick chart
US natural gas futures test resistance
US natural gas futures are trying to overcome their current May high at 281.7, a rise above which would likely engage the early February low at 286.5 and probably also the mid-February highs at 287.9-to-289.9 which may act as resistance.
Minor support below the 55-day simple moving average (SMA) at 268.1 may be found around the 261.9 late April high.
Short-term outlook: bullish while above the 7 May low at 253.1
Medium-term outlook: neutral with a bullish stance while below the 12 May high at 281.7 but above the 235.1 April low
US natural gas daily candlestick chart
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