(Bloomberg) -- The euro may extend its decline to $1.25 after dropping below the March 30 low of $1.3114, said Sumitomo Trust & Banking Co., Japan’s fifth-largest bank.The $1.3114 level is so-called support on a horizontal trend line of a descending triangle, said Akifumi Uchida, deputy general manager of the marketing unit in Tokyo at Sumitomo Trust & Banking. The trend line connects the March 30 low and the April 9 low, based on data compiled by Bloomberg. A descending triangle consists of horizontal and descending trend lines.
“The euro is weakening and is likely to go below $1.30,” Uchida said. “The currency has broken out of the triangle to the downside.”
Europe’s single currency declined to $1.3137 at 1:35 p.m. in Tokyo from $1.3169 in New York yesterday. It touched $1.3090, the weakest level since March 18. The euro fell 2.7 percent this week, the most since the first week of the year. The $1.25 level was last seen on March 5.
Daily momentum indicators such as the moving average convergence/divergence also showed sell signals for the euro against the dollar, Bloomberg data shows. MACD charts can indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages based on nine-, 12- and 26-day periods. In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Support is a level where buy orders may be clustered, and resistance is where there may be sell orders.
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