The euro is poised to strengthen to an eight-month high of $1.3309 after staying above a key technical level, according to Credit Suisse Group AG, citing trading patterns.
The 17-nation currency is set to reverse last week’s 1.1 percent decline after remaining above $1.2985, the 50 percent retracement of its advance from $1.2662 on Nov. 13 to $1.3308 on Dec. 19, strategists at the company wrote in a note to clients, citing so-called Fibonacci analysis.
“The focus is shifting higher once more and we envisage a recovery,” the analysts including Cilline Bain in London wrote in the research note. “We expect a rebound.”
The euro weakened 0.2 percent to $1.3042 at 12:26 p.m. London time after falling to $1.2998 on Jan. 4, the lowest level since Dec. 12. The last time the single currency traded at $1.3309 was April 3.
Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break above resistance or below support indicates a currency may move to the next level.
Resistance refers to an area on a price graph where analysts anticipate sell orders to be clustered. Support is where there may be orders to buy.
In technical analysis, investors study charts of trading patterns and prices to predict changes in a security, currency or index.