March 21 (Bloomberg) -- The yen may decline to its weakest level in almost four years versus its U.S. counterpart in the second quarter if a key support level fails to hold, according to Credit Suisse AG.
The Japanese currency will face a test at the 96.71 level, according to David Sneddon, a technical analyst at Credit Suisse in London. The yen may depreciate to 100, which would be its lowest level since April 2009, if it breaches that support level, Sneddon said. The yen has gained 1.2 percent versus the dollar over the past five days.
“We view the current phase that we’re seeing as just a correction in an underlying uptrend in dollar-yen,” Sneddon said in a telephone interview. “When we can get above 96.71, which is the high we posted earlier in March, that will be the trigger to suggest we’re resuming that rally again and we can head up to the 100 area. We think the dollar-yen will hit 100 sometime in the second quarter.”
The yen increased 1.2 percent to 94.92 per dollar at 1:58 p.m. in New York.
The yen has fallen 6.8 percent this year, the worst performance among the 10 developed-nation currencies monitored by the Bloomberg Correlation-Weighted Indexes. The dollar gained 3.1 percent.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, currency or index. Support refers to an area on a chart where buy orders may be gathered.
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