The dollar may struggle to rise above a key technical level at 81.49 yen, Credit Suisse Group AG said, citing trading patterns.
The U.S currency’s rally is set to meet so-called resistance as it encounters the 61.8 percent retracement of its decline from 84.18 yen reached on March 15 to 77.13 on Sept. 13, analysts including Cilline Bain in London wrote in a note to clients, citing Fibonacci analysis. Resistance is an area where technical analysts anticipate sell orders to be clustered.
The dollar’s move higher “exposes the 81.49 61.8 percent Fibonacci retracement resistance hurdle,” the strategists wrote. “After some consolidation, we expect the market to target this Fibonacci level,” they said.
The dollar strengthened 1.4 percent to 81.37 yen at 1:40 p.m. London time, after reaching 81.42, the most since April 27.
Should the dollar appreciate beyond 81.49 yen, it may rise toward the 81.87 level reached on April 10, Bain said today by telephone.
Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. Support refers to an area where buy orders may be clustered.
In technical analysis, investors study charts of trading patterns and prices to predict changes in a security, currency or index.