The euro may be poised to reverse its yearlong drop against the British pound, according to Bank of America Corp., citing trading patterns.
The 17-nation shared currency may rise to 80.18 pence and beyond after breaking a key resistance level at 0.7916-to-0.7919 pence, MacNeil Curry, head of foreign-exchange and interest-rates technical strategy in New York at Bank of America Merrill Lynch, wrote in a note to clients today. A move above 81.41 pence would confirm a “base and turn,” he wrote.
“Evidence continues to build for a turn in trend of the yearlong decline,” Curry wrote. “Momentum has reached bearish extremes not seen since August 1997.” Curry didn’t immediately respond to a call for further comment.
The euro rose 0.3 percent to 79.46 pence at 12:58 p.m. New York time after touching 79.63, the strongest level since July 6. It has fallen from a 16-month high of 0.90835 pence reached on July 1, 2011.
The euro is the biggest decliner this year among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, falling 5.1 percent, while the pound has risen 0.1 percent.
Resistance is a level on a chart where sell orders may be clustered. In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.