Dollar-Yen Momentum Ebbs on 81.78 Resistance: Technical Analysis

The dollar is losing momentum against the yen after it repeatedly failed to breach the 81.78 level, UBS AG said, citing trading patterns.

The 81.78 level is the 38.2 percent Fibonacci retracement of the greenback’s drop from a high of 84.18 yen reached on March 15 to a low of 80.30 yen on April 16, according to data compiled by Bloomberg. It last touched 81.78 on April 20.

The failure of the dollar to break through that level “is now turning momentum lower within what is still a bearish trending condition,” Richard Adcock, London-based head of fixed-income technical strategy in London, wrote in a report yesterday. Resistance is an area on a chart where orders may be clustered.

The dollar added 0.1 percent to 81.18 yen at 9:47 a.m. in Tokyo, paring this week’s slide to 0.5 percent. The U.S. currency has lost 2.9 percent versus its Japanese counterpart since March 15. Its moving average convergence/divergence was at minus 0.1707, below the signal line of minus 0.1368, Bloomberg data show, indicating the greenback may decline.

MACD is a gauge of momentum and is calculated by subtracting the 26-day exponential moving average from the 12 day average. The signal line is a nine-day exponential moving average of the MACD, and provides buy and sell signals.

Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break above resistance indicates it may move to the next level.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, currency or index.

To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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