Euro May Rise to 21-Month High Versus Yen: Technical Analysis

The euro may advance versus the yen to the strongest level in almost 21 months even as it approaches a key level of resistance, according to Credit Suisse Group AG, which cited technical indicators.

The shared currency, which is in an upward corrective period after falling to a 12-year low in July, has “gained traction” at 113.50 yen and should test 116.02, Cilline Bain, a London-based technical analyst at Credit Suisse, wrote today in a client note. A move past that resistance level may result in appreciation to 121.94, which would be the euro’s highest level versus the yen since April 2011, Bain said.

“The market continues a long-term uptrend from July lows,” Bain said in a telephone interview. “The next leg higher in this uptrend should bring us back up to around 116.”

The 17-nation currency increased 0.6 percent to 114.58 yen at 10:26 a.m. in New York, after falling as much as 0.3 percent. The euro reached 115.99 on Jan. 2, its highest level since July 2011.

A break below 113.50 may result in a move lower to 111.45, according to Bain. If the euro sees sustained depreciation below that support level, it could experience a “deeper correction” to 105.98, its lowest level since Dec. 10. Credit Suisse bank has a year-end forecast of 100 yen per euro, according to data compiled by Bloomberg.

“We would need a sustained move or weekly close below 111.45 for a decent correction back down to support at 105.98,” Bain said.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Resistance refers to an area on a chart where sell orders may be clustered. Support is an area where there may be buy orders.

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.