Euro May Reach 169 Yen If It Stays Over 167.59, Mitsubishi Says

By Kosuke Goto

June 25 (Bloomberg) -- The euro may rise to a record 169 Japanese yen should it stay above its five-day moving average, said Masashi Hashimoto, a senior currency analyst at Bank of Tokyo-Mitsubishi UFJ Ltd.

The current five-day moving average is 167.59 and represents a level of so-called support, Tokyo-based Hashimoto said, citing technical charts traders use to predict price movements. The euro reached a record high of 168.99 yen on July 23. Support is an area where buy orders may be clustered.

``Should the euro stay beyond its five-day moving average, and should the average show the upward trend, the euro will have a high chance to reach its record high set on July 23,'' said Hashimoto at the unit of Japan's largest publicly traded financial group.


Europe's single currency traded at 167.82 yen at 11:58 a.m. in Tokyo, from 167.85 in New York yesterday, when it touched 168.38, the weakest since July 23.

If the euro rises beyond 169 yen, it may climb to 173.60, which is a 123.6 percent reversal of its decline to 149.27 on August 17 from a high of 168.99 on July 23, based on a series of numbers known as the Fibonacci sequence, Hashimoto said.

Other Fibonacci points are 38.2 percent, 50 percent and 61.8 percent. A break of one indicates a currency may move to the next, and a failure suggests a decline or a gain may stall.

Traders typically look for evidence of a currency's short- term trend by using the five-day moving average, and seek to predict two- to three-week trends with the 21-day moving average. They use moving averages to identify levels of support, where they expect buying, or resistance, where they expect selling.

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

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