By Yasuhiko Seki
March 12 (Bloomberg) -- The dollar may weaken to 95 yen and $1.33 per euro as momentum charts show “sell” signals for the greenback, Bank of Tokyo-Mitsubishi UFJ Ltd. in Tokyo.
The dollar may extend its decline to 95 yen, or 38.2 percent below the peak of its rally from this year’s low in January, said Osamu Takashima, chief foreign-exchange analyst at Bank of Tokyo-Mitsubishi, citing a so-called Fibonacci chart. Fibonacci analysis indicates the dollar will drop to $1.33 per euro, Takashima said.
“The dollar finished below its opening level against the yen for a second day and below the five-day moving average, suggesting a short-term downward trend,” Tokyo-based Takashima wrote in a research report today.
The dollar traded at 96.23 yen as of 1:01 p.m. in Tokyo, from 97.27 late yesterday in New York. It touched 95.96, the weakest level since Feb. 24. The greenback was at $1.2832 per euro from $1.2837 late yesterday.
Daily momentum charts such as the stochastic oscillator and moving average convergence/divergence are also now showing sell signals for the dollar, Takashima said.
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. MACD charts can indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages based on nine-, 12- and 26-day periods.
The greenback climbed to 99.68 yen on March 5, the strongest in almost four months, after touching its lowest in more than 13 years at 87.13 yen on Jan. 21.
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: Yasuhiko Seki in Tokyo at Yseki5@bloomberg.net.
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