Euro May Advance to $1.5909 on Charts, Tokyo-Mitsubishi Says

By Kosuke Goto

July 10 (Bloomberg) -- The euro may rise to $1.5909 against the dollar should it stay above its five-day moving average, said Masashi Hashimoto, a senior currency analyst at Bank of Tokyo-Mitsubishi UFJ Ltd.

The five-day moving average, currently at $1.5715, will provide a level of so-called support for the euro, Tokyo-based Hashimoto said, citing technical charts traders use to predict price movements. The target of $1.5909 will match a two-month high set by Europe's single currency on July 3. Support is an area where buy orders may be clustered.

``Should the euro break through its five-day moving average completely, it will likely challenge its July 3 high,'' said Hashimoto at the unit of Japan's largest publicly traded financial group.

Europe's 15-nation currency traded at $1.5728 against the dollar as of 11:55 a.m. in Tokyo, from $1.5743 late in New York yesterday. It reached a record high of $1.6019 on April 22.

Traders typically look for evidence of a currency's short- term trend by using the five-day moving average, and seek to predict its two- to three-week outlook by using 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.