Oct. 22 (Bloomberg) -- The Dollar Index may decline to its lowest level in more than 13 months after weaker-than-forecast payroll data pushed the gauge below a key support level, according to JPMorgan Chase & Co., citing technical indicators.
The benchmark gauge may depreciate to its weakest level since Sept. 14, 2012, after breaking support in the area from 79.55 to 79.68, according to Niall O’Connor, a New York-based technical analyst at JPMorgan. The Dollar Index will first test support at 78.92, the gauge’s 2013 low, before testing last year’s September low of 78.60, he said.
“The index is finally putting some distance from the big area of support between 79.50 to 79.65,” O’Connor said in a phone interview. “That suggests there’s more downside risk, and we’re probably more likely to see a closer test of the February low, and possibly down to the September low.”
The index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, decreased 0.5 percent to 79.266 at 12:01 p.m. in New York. The gauge fell earlier to 79.223, its weakest level since Feb. 4.
The dollar slipped 0.7 percent to $1.3781 per euro after falling to $1.3786, the lowest level since November 2011. The greenback was little changed at 98.18 yen after earlier falling as much as 0.3 percent.
“You’ve seen confirmation in a lot of dollar pairs,” O’Connor said. “We’re set up for a broader-dollar-weakness story that will continue to develop.”
Employers in the U.S. added 148,000 workers to payrolls in September following a revised 193,000 gain in August, Labor Department figures showed today in Washington. The median forecast of 93 economists surveyed by Bloomberg called for a 180,000 advance.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, currency or index. Resistance refers to an area on a chart where sell orders may be gathered. Support is an area where there may be buy orders.
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