The yen is poised to weaken against the dollar after having breached a trend-line resistance level, according to Bank of America Corp.
“The evidence points to a move higher,” MacNeil Curry, head of foreign-exchange and interest-rates technical strategy in New York at Bank of America Merrill Lynch, said in a telephone interview. Resistance levels “are likely to stall it but unlikely to cap it.”
The Japanese currency depreciated to 78.86 versus the greenback yesterday, breaking the 4.5-month trend-line resistance of 78.76, Curry wrote yesterday in a research report. The firm is targeting the yen to weaken to 80.56 to 80.60, and potentially to 81.88.
While other resistance levels, such as the currency’s 200-day moving average at 79.38 and the top of the daily cloud at 79.01, may interrupt the yen’s depreciation, it’s likely to be temporary, Curry said.
The yen slipped 0.4 percent to 78.96 per dollar, compared with 76.03 on Feb. 1, the strongest level on a closing basis this year.
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index. Resistance refers to an area on a chart where sell orders may clustered.