Dollar May Rise to 108.58 Yen on Charts, Daiwa's Kinouchi Says

By Kosuke Goto

July 8 (Bloomberg) -- The dollar may strengthen to 108.58 yen, said Eiji Kinouchi, chief technical analyst at Daiwa Institute of Research, citing charts traders use to predict price movements.

The U.S. currency's 13-week moving average against the yen last week rose above the 26-week moving average, a pattern called a ``golden cross,'' which is a bullish signal, Tokyo- based Kinouchi said. The 13-week moving average is currently at 104.89 yen and the 26-week moving average is at 104.64, according to data compiled by Bloomberg. The target of 108.58 yen will match a four-month high the dollar set on June 16.

``Technically, that's a sign of dollar-buying,'' said Kinouchi at the unit of Japan's second-largest brokerage. ``The dollar is likely to head higher against the yen.''

The dollar traded at 107.14 yen as of 11:09 a.m. in Tokyo from 107.18 yen in New York yesterday, when it rose to 107.75, the highest level since June 26.

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.