The euro, which has gained more than 5 percent against the yen this month, may fall fall to the lowest level in three weeks should it fail to climb above 120.72 yen, Credit Suisse Group AG said, citing trading patterns.
The single currency may find so-called support at 117.05 yen initially, the bank said in an e-mailed note. A decline below that level may push it toward 113.55, the lowest level since the end of December.
“Trendline support at 117.05 manages to hold for now,” wrote researchers including London-based head of technical analysis David Sneddon. “Despite this, while the market remains capped by 120.72 resistance, our bias remains for the downside to 113.55.”
The euro will have to rise above key levels of 120.74 yen and 121.94 yen before it can advance toward 123.35 and then 127.94, the bank said. The 17-nation currency advanced 2 percent against the yen to 120.40 at 4:55 p.m. London time.
Resistance is an area on a price graph where technical analysts anticipate sell orders to be clustered. Support refers to an area where they anticipate buy orders.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a bond, commodity, currency or index.