Dollar May Fall as Low as 101.45 Yen on Chart, BNP Paribas Says

By Ron Harui

Sept. 16 (Bloomberg) -- The dollar may fall to 101.45 yen after it dropped below so-called support at 104.95 yen, according to Andrew Chaveriat, a technical analyst at BNP Paribas SA in New York.

Support at 104.95 yen is a 38.2 percent retracement of the dollar's climb from the March low of 95.76 yen to the August high of 110.66 yen, based on a series of numbers known as the Fibonacci sequence. Momentum indicators such as the weekly stochastic oscillator chart also show the ``medium-term bias is negative,'' Chaveriat wrote in a research note yesterday.

The dollar's ``sell-off got the ball rolling down hill, cracking and closing below the 38.2 percent retracement of the March-August rise at 104.95,'' Chaveriat wrote. ``The important bearish development for dollar-yen, suggesting medium-term losses ahead, is the presence of very strong negative weekly momentum.''

The U.S. currency weakened to 104.28 yen as of 11:30 a.m. in Tokyo from 104.66 yen late in New York yesterday. It earlier reached 104.04 yen, the lowest since July 16. The dollar has fallen 5.8 percent since the Aug. 15 high of 110.66 yen.

This ``bearish'' weekly momentum provides ``powerful downside thrust,'' Chaveriat said. ``We see scope for a correction to the 50 percent and potentially 61.8 percent retracement at 103.20 and 101.45,'' he wrote.

A stochastic oscillator chart measures the closing price of a security relative to its highs and lows during a particular period to try to predict whether it will rise or fall.

Fibonacci analysis is a mathematical formula based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break of one indicates a currency may move to the next. A failure suggests a trend may stall. Other Fibonacci points include 50 percent and 61.8 percent.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Resistance is where sell orders may be clustered, while support is where there may be buy orders.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net