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Euro May Reach $1.3722 Moving Average: Technical Analysis

Feb. 29 (Bloomberg) -- The euro may rise toward its 200-day moving average of $1.3722, Bank of Tokyo-Mitsubishi UFJ Ltd. said, citing trading patterns.

Lines tracking the 17-nation currency’s 5- and 21-day moving averages versus the dollar are both pointing up, signaling a bullish trend for the euro in the long term, according to Teppei Ino, an analyst in Tokyo at the unit of Japan’s largest financial group. The last time the euro traded at $1.3722 was on Nov. 14.

The euro may first fall toward the 90-day moving average of $1.3243 if it’s unable to rise above $1.3509, the 38.2 percent retracement of the common currency’s slide from the May 4 high of $1.4940 to the Jan. 13 low of $1.2624, Ino said, citing the Fibonacci chart. The euro may be poised for a downward correction in the short term because the recent appreciation has been “rapid,” he said.

“If the euro is unable to rise above the $1.35 level in the near term, it’s likely to test lower because its appreciation has been rapid,” Ino said.

The euro traded at $1.3460 as of 8:25 a.m. in Tokyo, from $1.3458 yesterday in New York. The euro’s low on Jan. 13 was the weakest level since August 2010. It climbed to as high as $1.3487 on Feb. 24, the strongest since Dec. 5.

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

To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Shigeki Nozawa in Tokyo at snozawa1@bloomberg.net

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

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