Dollar Rises for Ninth Day Versus Euro as Crude Oil Falls

By Ye Xie and Agnes Lovasz

Sept. 9 (Bloomberg) -- The dollar advanced for a ninth consecutive day against the euro as crude oil prices fell.

The greenback earlier traded within a cent of $1.40 per euro as the U.S. government's takeover of Fannie Mae and Freddie Mac boosted confidence in global markets.

`Commodities are coming under renewed pressure,'' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. ``We have seen the correlation between crude oil and the major currencies remain strong or strengthen over the past few weeks, so weaker crude oil should translate into a weaker euro.''

The dollar increased 0.2 percent to $1.41 per euro at 9:22 a.m. in New York, from $1.4128 yesterday. It touched $1.4047, the strongest level since Oct. 9, 2007. The yen gained 0.4 percent to 107.83 per dollar, from 108.28. The euro decreased 0.6 percent to 152.09 yen, from 152.96.

The euro is likely to approach ``support'' at $1.3840 against the dollar this week, said Pak Lai Ng, a technical analyst at Forecast Pte in Singapore, citing charts that predict price movements.

That level is a 50 percent retracement of the euro's rise from the November 2005 low of $1.1640 to the all-time high of $1.6038 set in July, based on a series of numbers known as the Fibonacci sequence. The support level, where euro buy orders are concentrated, lies on an ascending trend line that began in February 2002, Ng said. Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low.

RBS Forecast

Royal Bank of Scotland Group Plc cut its forecasts for the euro versus the dollar today. The single currency will end the year at $1.40 before weakening to $1.35 by the end of the first quarter of 2009, it said. The bank's previous predictions were $1.50 and $1.45, respectively.

The U.S. government seized control of Fannie Mae and Freddie Mac on Sept. 7 after the biggest surge in mortgage defaults in at least three decades threatened to topple the companies. The Treasury plans to provide secured short-term funding to Fannie, Freddie and 12 federal home loan banks.

The European currency was supported earlier on speculation Pfizer Inc. may make a bid for Bayer AG, Germany's largest drugmaker. Bayer, based in Leverkusen, Germany, has a market capitalization of almost 42 billion euros ($59 billion), based on today's share price. Bayer spokesman Guenter Forneck declined to comment. New York-based Pfizer is the world's biggest drugmaker.

To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Agnes Lovasz in London at alovasz@bloomberg.net