The euro may drop to its lowest level in more than 11 years against the yen after it declined below the 21-day moving average, Citigroup Inc. said, citing trading patterns.
The 17-nation currency breached its 21-day moving average at 96.26 on Aug. 10 and yesterday, when the mean was at 96.24, data compiled by Bloomberg show. That may signal a drop to 94.12, Tokyo-based currency strategist Osamu Takashima wrote in a report published today. The level was last seen on July 24 and was the least since November 2000.
“The downside risk for the pair must obviously be larger than the upside,” Takashima wrote. “Now that the pair is breaking below the 21-day moving average around 96.2, we need to be cautious that it could test again the recent lows at 94.12 within the coming weeks.”
The euro fell 0.3 percent to 96.82 yen as of 10:30 a.m. in Tokyo from yesterday in New York. Its 21-day average was at 96.24. The single currency has retreated 4.2 percent versus the yen since June 29, the second-biggest drop among the Japanese currency’s 16 major counterparts.
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.
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