Nov. 6 (Bloomberg) -- The euro is likely to extend its 1.3 percent drop in the past three sessions against the U.S. dollar this week, according to IG Markets Securities Ltd., which cited trading patterns.
The 17-nation currency has fallen below its 200-day moving average and continues to trade below it, according to Junichi Ishikawa, a Tokyo-based analyst at IG Markets. “The euro has broken the $1.28 level after falling below its 200-day moving average and technical indicators are suggesting further declines,” he said.
The $1.2755 level, which the euro failed to break below on Sept. 10 and Sept. 11, will act as an initial support, Ishikawa said. Should the euro fall below that level, it could test $1.2739, near the 38.2 percent retracement from its rise from the July 24 low of $1.2043 to the Sept. 17 high of $1.3172 on the Fibonacci chart, he said. The euro last touched $1.2739 on Sept. 7.
The shared currency was little changed at $1.2787 as of 10:55 a.m. in Tokyo from $1.2796 yesterday, when it touched $1.2767, the weakest since Sept. 11.
Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a new high or a low. Support refers to an area on a chart where analysts predict that orders to buy may be clustered. In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.
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