Feb. 4 (Bloomberg) -- The euro may strengthen 2 percent against the dollar, extending its best start to a year since the currency’s 1999 creation, after it rose above a level of so-called resistance, Commerzbank AG said, citing trading patterns.
The single currency may rise to $1.3833, the most since Nov. 9, 2011, after it “cleared major resistance in the 1.3485 to $1.3525 band,” the bank said in an e-mailed note today. The $1.3833 level represents the 61.8-percent retracement of the 2011-2012 move, it said.
“The euro has seen a weekly close above the 200-week moving average and the 55-month moving average, and we will need to adjust higher our forecast and outlook,” wrote technical analysts Karen Jones and Axel Rudolph in London. “This has introduced scope to $1.3833.”
The euro lost 0.6 percent to $1.3556 at 1 p.m. London time today. The 200-week moving average was at $1.3532 and the 55-month gauge at $1.3526, according to data compiled by Bloomberg.
The bank said the 17-nation currency may fall toward $1.3459 after the recent rally before it resumes gains.
The single currency is the top performer this year among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes, having appreciated 2.7 percent. The dollar fell 0.3 percent while the yen dropped 7.4 percent.
Resistance is an area on a price graph at which technical analysts expect sell orders to be clustered.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a bond, commodity, currency or index.
To contact the reporter on this story: Anchalee Worrachate in London at firstname.lastname@example.org
To contact the editor responsible for this story: Paul Dobson in London at email@example.com