Euro Rally May Test Two-Year High, BofA Says: Technical Analysis
Frankfurt (Nov 7) The euro may rise to a two-year high versus the U.S. dollar if it holds a key level of support, according to Bank of America Corp., citing technical indicators.
The 17-nation currency’s ability to keep from weakening beyond the area from $1.3412 to $1.3452 will confirm a longer-term bullish trend for the euro, MacNeil Curry, head of foreign-exchange and interest-rates technical strategy in New York at Bank of America Merrill Lynch, wrote in a client note yesterday. If the euro can appreciate beyond its October high to $1.3835, it will test $1.40, which would be its strongest level since October 2011.
“Euro-dollar is still in an uptrend,” Curry said today in a phone interview. “All we’ve done is sell off very aggressively to previous support. If we take out $1.3835, we have a decent shot at $1.40.”
The shared currency gained 0.5 percent to $1.3541 at 10:34 a.m. in New York after earlier climbing 0.6 percent, the most since Oct. 22. It is up 2.6 percent versus the greenback in 2013.
The euro has increased 5.5 percent this year among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has risen 2.6 percent, while the yen is the worst performer with an 11 percent drop.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Support refers to an area on a chart where buy orders may be clustered.