(Bloomberg) -- Asian currencies are likely to extend declines after the Bloomberg-JPMorgan Asia Dollar Index slid below a key technical level this week, according to Nomura Holdings Inc. said. The Asia Dollar Index, which tracks the region’s 10 most- used currencies excluding the yen, is set to close below its 50- day moving average for a third straight day, signaling the likelihood it will fall. The measure slid 0.5 percent in the past month and yesterday closed at a two-week low. It last broke below the moving average on Jan. 20, before tumbling 3.7 percent in the following six weeks to a four-year low.“There are a lot of momentum traders out there who will take these as signals to sell Asian currencies,” said Craig Chan, a Singapore-based strategist at Nomura. “Our own models that take into account foreign equity flows in Asia, risk reversal in Asian currency options as well as yield differentials, also seem to be consistent with those technical indicators calling for investors to be long dollar-Asia.”
The Asian Dollar Index was down 0.1 percent at 107.28 as of 11:02 a.m. in Singapore, according to data compiled by Bloomberg. It reached 101.11 on March 2, the lowest since November 2004.In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Moving averages are used to identify trends and find support or resistance. Support is a level where buy orders may be clustered and resistance is where there may be sell orders.
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