Dollar May Extend Decline to Below 70 Yen on Ichimoku: Technical Analysis
Aug. 26 (Bloomberg) -- Geoffrey Yu, currency strategist for UBS Ltd., talks about hints from Japanese policymakers they may curb the advance of the yen. Yu also discusses the prospect of the Swiss National Bank stepping in to counter gains in the franc. He speaks with Mark Barton on Bloomberg Television's "Countdown." (Source: Bloomberg)
Aug. 24 (Bloomberg) -- Michael Woolfolk, senior currency strategist at Bank of New York Mellon Corp., talks about the outlook for the yen and U.S. economy. Woolfolk speaks with Margaret Brennan on Bloomberg Television's "InBusiness." (Source: Bloomberg)
Aug. 24 (Bloomberg) -- Shaun Osborne, chief currency strategist at TD Securities Inc., talks with Bloomberg's Julie Hyman about the outlook for Japan's yen. The yen advanced to the strongest in 15 years versus the dollar and to its highest level against the euro since 2001 even after Prime Minister Naoto Kan told reporters “steep currency gains are undesirable.” (Source: Bloomberg)
Aug. 24 (Bloomberg) -- Jesper Koll, head of equity research at JPMorgan Chase & Co., talks about the outlook for Japanese stocks. Koll also discusses the prospects for Bank of Japan intervention in the foreign-exchange market, and the nation's government. Koll speaks from Tokyo with Bloomberg's Rishaad Salamat. (Source: Bloomberg)
Aug. 27 (Bloomberg) -- Mitul Kotecha, Hong Kong-based global head of foreign-exchange strategy at Credit Agricole CIB, talks about the outlook for the U.S. and European economies and central banks' monetary policies. Kotecha also discusses the possibility that Japan's policy makers will take measures to curb the yen's advance. Kotecha talks with Linzie Janis on Bloomberg Television's "Global Connection." (Source: Bloomberg)
The dollar may drop to less than 70 yen, surpassing a record low reached in 1995, Mizuho Corporate Bank Ltd. said, citing trading patterns.
A weekly ichimoku chart shows the U.S. currency has been in a downtrend since it reached this year’s high of 94.99 yen in May, said Hiroyuki Tanaka, chief technical analyst in Tokyo at the unit of Japan’s second-largest bank. A daily ichimoku chart signals any gains in the dollar will be limited as the currency stays below the so-called conversion line and baseline, he said.
“The dollar’s downtrend continues and any small gains will be capped,” Tanaka said yesterday. “The currency is likely to try to reach a new bottom.”
The dollar traded at 84.39 yen as of 7:23 a.m. in Tokyo from 93.02 at the start of the year. The U.S. currency dropped to 83.60 yen on Aug. 24, the lowest since June 1995.
The greenback’s decline may gain momentum if its drops below 79.75 yen, the post-World War II low reached in April 1995, Tanaka said.
“It can reach below 70 yen,” he said.
Ichimoku analysis, developed by a Japanese journalist, is used to predict a currency’s direction through analyzing the midpoints of historical highs and lows. The conversion line plots the sum of the highest high and lowest low over the last nine trading days. The baseline is the same calculation over the past 26 days.
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 reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Hiroko Komiya in Tokyo at hkomiya1@bloomberg.net.
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