Euro May Decline on ‘Head and Shoulders’: Technical Analysis

The euro may fall to a four-week low against the dollar after it slid below support at about $1.3494, according to Okasan Securities Co., citing trading patterns.

The $1.3494 level represented a so-called neckline of a head-and-shoulders formed by the “left shoulder” on Jan. 27, the “head” on Feb. 2 and the “right shoulder” on Feb. 9, said Tsutomu Soma, a bond and currency dealer at Okasan. The breach of the neckline connecting the base of the three peaks, which signals the reversal of a trend, suggests the euro may drop to at least $1.3364, which is the 50 percent Fibonacci retracement of the currency’s rise from its Jan. 10 low, he said.