Asia Dollar Index May Decline to 7-Month Low: Technical Analysis

An index based on a trade-weighted basket of Asian currencies against the U.S. dollar is likely to decline to the lowest level in more than seven months, Citigroup Inc. said, citing technical patterns.

The JPMorgan Asia Dollar Index, which includes currencies such as South Korea’s won, the Singapore dollar and Thai baht, may approach the 200-week moving average of 114.60 should it close below support at 116.70 to 116.81, Daniel Tobon, a New York-based analyst at Citigroup, wrote in a note to clients. The ADXY Index was little changed at 117.32 as of 6:29 a.m. in London from yesterday, when it declined to as low as 117.15, the weakest level since Oct. 11.

“The ADXY Index continues to move lower towards support at 116.70-116.81, where the 55 day moving average and upward sloping trend line converge,” Tobon wrote. “A close below there would open the way to” 114.60, according to Tobon.

The trendline connects the lows touched in March 2009 and June 2012, according to data compiled by Bloomberg. The ADXY Index last touched 114.60 on July 26.

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

To contact the reporter on this story: Naoto Hosoda in Tokyo at nhosoda@bloomberg.net

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

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