Buy Euro Against Dollar as Risk Concern Eases, Citigroup Says

By Garfield Reynolds

Oct. 29 (Bloomberg) -- Investors should buy the euro versus the dollar as global risk concerns ease, Citigroup Global Markets Inc. said, citing technical charts traders use to predict price movements.

Investors who purchase the euro may gain as much as 4.2 percent as the 15-nation currency rallies from near a 2 1/2-year low, said Tom Fitzpatrick, head of global currency strategy at Citigroup Global Markets.

``We believe the euro's move lower against the dollar has been driven by a strong anti-risk bias that has benefited the yen and the dollar,'' New York-based Fitzpatrick said today in an e-mailed interview. ``Today's improvement in commodities, equities, the rise in yields and emerging-market improvements suggest a short-term respite that could send the euro back above $1.30 in the near term.''

The euro climbed to $1.2800 versus the dollar at 9:12 a.m. in Tokyo, from $1.2683 late yesterday, when it touched $1.2330, the weakest level since April 2006.

Citigroup recommended investors should aim for a target of $1.30, and exit the bet if the currency falls to $1.2535. The euro may be headed for a ``bullish key reversal'' that ``suggests the bounce may extend even further with the $1.326 to $1.336 range a possibility,'' the bank's strategists said in a research note yesterday, citing technical charts.

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: Garfield Reynolds in Sydney at greynolds1@bloomberg.net.