Euro May Reach Record $1.6190, 173.60 Yen, Bank of Tokyo Says

By Kosuke Goto

July 22 (Bloomberg) -- The euro may rise to record highs of $1.6190 versus the dollar and 173.60 yen, said Masashi Hashimoto, a senior currency analyst at Bank of Tokyo-Mitsubishi UFJ Ltd., citing charts traders watch to predict price movements.

The common European currency is poised to gain versus the dollar after it broke out of a so-called triangle formation, which was made by a descending upper trend line connecting a high of $1.6019 reached on April 22 and a high of $1.5843 on June 9, and an ascending lower trend line joining a low of $1.5285 on May 8 and one of $1.5303 on June 13, Hashimoto said.

The currency may now approach a level of so-called resistance at about $1.6190, a 123.6 percent reversal of its decline to $1.5285 on May 8 from a high of $1.6019 on April 22, based on a series of numbers known as the Fibonacci sequence, Tokyo-based Hashimoto said.

The euro is also poised to strengthen versus the yen after rising above the higher side of another triangle formed by a descending upper trend line connecting a high of July 23, 2007, and another of Nov. 7, and an ascending lower trend line connecting lows of Aug. 17 and March 20, Hashimoto said.

The next target of about 173.60 yen is also a 123.6 percent reversal of the euro's decline to 149.27 on Aug. 17 from a high of 168.99 set on July 23, 2007, based on the Fibonacci sequence, he said.

``The euro still looks strong on charts,'' said Hashimoto at the unit of Japan's biggest publicly traded lender by assets.

The euro traded at $1.5919 per dollar as of 8:10 a.m. in London, compared with $1.5922 late yesterday in New York. It bought 169.56 yen from 169.48 yesterday, when it reached a record high of 169.91.

Other Fibonacci points are 50 percent, 61.8 percent and 76.4 percent. A break of one of these indicates a currency may move to the next level. A failure suggests a trend may stall. Resistance is a level where selling may outweigh buying.

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.