Dollar Index May Decline to Record Low on Charts, Goldman Says

By Kosuke Goto

July 14 (Bloomberg) -- The U.S. Dollar Index may extend its decline to reach a record low of 70.70 should it close below so- called support at 71.82, said Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc., the world's biggest securities firm.

The index, which tracks the performance of the dollar against six of the nation's biggest trading partners, has fallen through the lower boundary, or support, of an ascending channel that connects the lows of March 17, April 22 and May 22, London- based Edgeley said. The next support level at 71.82 is the low set on May 22, he said. Support is a level where buy orders may be clustered.

``The Dollar Index has broken below the shallow bull channel base line again, testing wave support at 71.82,'' Edgeley wrote in a research note yesterday. ``A close below would suggest a retest of the all-time lows at 70.70.''

The U.S. Dollar Index traded on ICE Futures in New York fell as low as 71.77, the weakest since April 23, before trading at 72.03 as of 1:03 p.m. in Tokyo from 72.10 on July 11. The index declined to 70.70 on March 17, the lowest since it was first compiled in 1973. The index has fallen 6 percent this year.

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.