Dollar Index May Fall to 1-Month Low: Technical Analysis

The Dollar Index (DXY) may fall to a one- month low after the gauge touched its 25-day moving average yesterday, according to Gaitame.com Research Institute Ltd., citing trading patterns.

“Breaking below the 25-day moving average will bring the Dollar Index into a correction,” said Takuya Kawabata, a researcher at Tokyo-based Gaitame.com.

Initial support below the average will be at 80.490, which is the 61.8 percent retracement of an advance from the May 1 low to the June 1 high, he said, citing a Fibonacci chart. The index may fall further to the 200-day moving average of 79.227, a level unseen since May 4, Kawabata said.

The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, lost 0.1 percent to 82.607 as of 7:48 a.m. in London. It reached 83.542 on June 1, the highest since August 2010. The gauge fell to 78.603 on May 1, the weakest level since Feb. 29.

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index. Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a new high or low.

To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Kazumi Miura in Tokyo at kmiura1@bloomberg.net.

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

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