Euro Advance Against Dollar May Stall on Charts, Citigroup Says
Euro Advance Against Dollar May Stall on Charts, Citigroup Says
April 9 (Bloomberg) -- The euro's advance against the dollar may stall after its failure to strengthen beyond so- called resistance at $1.5805, said technical analysts led by Tom Fitzpatrick at Citigroup Global Markets Inc.
Resistance at $1.5805 represents a 76.4 percent Fibonacci retracement of the euro's decline from its record high of $1.5903 on March 17 to $1.5341 on March 24, according to Citigroup's chart. Since March 24, the euro has rallied 2 percent. Resistance is where sell orders may be clustered.
``The euro-dollar headed higher in its continuing gravity- defying performance, but we still feel that this elevated level is difficult to sustain,'' wrote Citigroup's analysts, including New York-based Fitzpatrick, global head of currency strategy, in a research note yesterday.
Europe's single currency traded at $1.5703 as of 1:40 p.m. in
``While we still remain biased to believe the euro-dollar may head lower, we need a move through good support levels to support this view,'' the analysts wrote, citing support at $1.5628, between $1.5510 and $1.5574, and at $1.5341.
The $1.5628 level is the April 7 low, the area between $1.5510 and $1.5574 includes the April 3 low, and the $1.5341 level is the March 24 low, according to data compiled by Bloomberg. Support is where buy orders may be clustered.
``We need a break below $1.5341 to validate this view and suggest a sub-$1.48 move,'' the analysts wrote. A level below $1.48 would be the euro's lowest since Feb. 26.
Fibonacci analysis is a mathematical formula based on the theory that prices rise or fall by certain percentages after reaching a high or low. Other Fibonacci points are 23.6 percent, 38.2 percent, 50 percent and 61.8 percent. A break of one indicates a currency may move to the next, while a failure suggests a trend may stall.
