Euro Is Likely to `Test' $1.2329 in Short Term, Citigroup Says

By Ron Harui

Nov. 13 (Bloomberg) -- The euro may ``test'' $1.2329 after falling beyond so-called support at $1.2558, technical analysts at Citigroup Global Markets Inc. said.

Support at $1.2558 was a 76.4 percent Fibonacci retracement of the euro's climb from the Oct. 28 low of $1.2330 to the Oct. 30 high of $1.3292, according to data compiled by Bloomberg. Support is a level where buy orders may be clustered.

``A test of $1.2329 is now likely in the short term and a close below there would strongly indicate that the overall downtrend has resumed,'' New York-based Tom Fitzpatrick and London-based Shyam Devani wrote in a research note yesterday.

The euro declined to $1.2477 as of 2:30 p.m. in Tokyo from $1.2505 late in New York yesterday. The currency earlier reached $1.2438, the lowest since Oct. 28.

Next support below $1.2329 is $1.2134, which is a 50 percent Fibonacci retracement of the ``whole bull market'' from the October 2000 low of $0.8230, Citigroup's analysts wrote.

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