Dow finds support as EUR/JPY rises, US natural gas prices stay sidelined
Technical analysis of the Dow Jones Industrial Index as it finds support while EUR/JPY rises further and US natural gas prices range trade in low volatility.
Macro update
US software selloff deepens:
United States (US) software and data-services shares extended their decline for a seventh straight session, with the S&P 500 software index now about 21% below its 200-day moving average and roughly $1 trillion in market value erased in just over a week as fears build that new artificial intelligence (AI) tools could disrupt existing business models.
Big tech under pressure, Amazon hit late:
Heavyweights including ServiceNow, Salesforce and Microsoft fell sharply, while Amazon dropped 4.4% in regular trade and a further 10% after hours after flagging a more than 50% jump in capital spending, amplifying concerns over the payback from massive AI investment.
Rotation out of growth accelerates:
Investors continued shifting away from richly valued growth stocks into more defensive, value-leaning sectors such as consumer staples, energy and industrials, with rising short interest and reduced hedge fund exposure adding to the pressure.
Volatility spreads across assets:
The selloff pushed market volatility to its highest level since November, with leveraged positions being unwound across equities, commodities and digital assets as risk appetite weakened.
Bitcoin slips through key support:
Bitcoin briefly dropped towards $60,000 - a 16-month low - before stabilising, leaving it down around 16% on the week and 27% year to date as investors exited higher-risk trades linked to the tech cycle.
Precious metals turn volatile:
Gold edged higher into the end of the week but still finished down around 1%, while silver remained under heavy pressure, falling roughly 16% for the week, underscoring how leveraged and speculative positioning is driving sharp swings even in traditional safe havens.
Dow Jones comes off record high
The Dow Jones Industrial Average continues to range trade below this week's record high at 49,653 but above its late January 48,460 low. While it holds, the medium-term uptrend remains valid with the psychological 50,000 region in focus.
A fall through the 20 January low at 48,428 may put the mid-December to early January lows at 47,853 - 47,850 back on the cards.
Short-term outlook:
Bullish while above 48,428.
Medium-term outlook:
Bullish while above the 2 January low at 47,853, targeting the 50,000 region.
Dow Jones daily candlestick chart
EUR/JPY remains bid
EUR/JPY's advance is expected to continue with a retest of this week's high at ¥185.51 on the cards as long as Monday's ¥184.28 high underpins.
Further up lurks the January peak at ¥186.87.
Short-term outlook:
Bullish while above Wednesday's ¥184.02 low.
Medium-term outlook:
Neutral with a bullish slant while above the 26 January low at ¥181.79.
EUR/JPY daily candlestick chart
Natural gas futures
US natural gas futures have seen another sharp down leg on Monday, taking the price to $286.5 by Tuesday before gradually rising off this level in low volatility.
Over the past couple of days the natural gas price seems to stick to the 200-day simple moving average (SMA) at $317.1 with further sideways trading being at hand.
Short-term outlook:
Neutral around the 200-day simple moving average (SMA) at $317.1
Medium-term outlook:
Neutral between the early February high at $425.6 and the $272.5 mid-January low.
Natural gas daily candlestick chart
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