The euro may rise to the strongest versus the dollar this year if a key level of resistance fails to hold, according to Credit Suisse Group AG.
The 17-nation currency is getting support from a key moving average at $1.3505, above which it will test resistance in the $1.3606-to-$1.3608 area, according to David Sneddon, global head of technical analysis in London at Credit Suisse. Further strength above this will see the shared currency test $1.3646 and then $1.3711, the 2013 high touched Feb. 1.
“Euro-dollar continues to hold the 21-day average at $1.3505, and we look for a basing effort here to retest the $1.3646 peak,” Sneddon wrote today in a client note. “Extension through here is required to see the trend turn higher again for the $1.3711 February peak.”
The euro appreciated 0.3 percent to $1.3580 at 11:54 a.m. in New York after rising as much as 0.4 percent to $1.3598. Europe’s shared currency reached $1.3646 on Oct. 3, the highest level since Feb. 4.
The European currency has gained 5.9 percent this year, making it the best performer among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen has lost the most, falling 11 percent, while the dollar has risen 2.6 percent.
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, and support is an area where there may be buy orders.
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