Dollar May Fall to 105.72 Yen, Bank of America's Fujii Says

By Kosuke Goto

The dollar may fall to 105.72 yen, based on charts traders use to predict price movements, according to Tomoko Fujii, head of economics and strategy for Japan at Bank of America Corp.

The currency has stayed below its 200-day moving average after rising above it from June 13 to June 18 for the first time since August, signaling further losses. The dollar may now fall to the next level of so-called support around 105.72 yen, where an ascending trend-line, connecting a low of 95.76 yen on March 17 and a low of 102.74 on May 22, extends to, she said.

``Technically, it seems the dollar-yen is heading for a weaker-dollar and a stronger-yen direction,'' Tokyo-based Fujii, at the second-largest U.S. bank, wrote in a research note today.

The U.S. currency traded at 107.36 yen as of 9:55 a.m. in Tokyo, close to the weakest level since June 12, from 107.33 in New York on June 20. The dollar's 200-day moving average was at 108.08 yen.

Traders often look for signs of a currency's short-term trend by viewing the five-day moving average and aim to forecast longer-term trends with the 21-, 65- and 200-day moving averages.

They use moving averages to identify levels of support, where buying is expected, or resistance, where selling is predicted.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast price changes in a security, commodity, currency or index.

To contact the reporter on this story: Kosuke Goto in Tokyo at kgoto2@bloomberg.net