Technical Analysis: Pound & Euro is going to weaken further, yen should climb against US dollar

Pound May Fall to $1.54, BOE ‘Unconcerned,’ BNP Paribas Says

(Bloomberg) -- The pound may fall to $1.54 by the end of the year amid signs the Bank of England is “unconcerned” by the currency’s decline, according to BNP Paribas SA.

“The sterling negative sentiment continues to build,” analysts including Ian Stannard in London said in a research note today. “The Bank of England appears unconcerned by the currency weakness at this stage. We maintain our bearish sterling view, expecting the currency to be the weakest among the majors.”

The pound dropped the most since April versus the dollar yesterday after central bank Governor Mervyn King said its weakness was “very helpful” to the U.K. economy. The U.K. currency dropped 0.3 percent to $1.6018 as of 12:35 p.m. in London.

dclarke3@bloomberg.net

Euro May Fall to 2-Week Low Versus Dollar: Technical Analysis

(Bloomberg) -- The euro may fall to a two-week low against the dollar by the end of next week, according to Tokai Tokyo Securities Co., citing trading patterns. The 16-nation currency is poised to enter a downtrend after having risen to $1.4844 on Sept. 23, the highest since Sept. 22, 2008, said Yoh Nihei, a trading group manager at Tokai Tokyo. Daily momentum indicators such as the moving average convergence/divergence chart are giving signals to sell euros for dollars, according to Nihei.

“The euro failed to rise above $1.45 in July and August,” Nihei said yesterday. “This time, that level is likely to be a strong support level.”

The euro dropped to a level of so-called support at $1.4611 on Sept. 21, Nihei said. Should the euro decline below the level, the next support will be about $1.4520, which represents the 21- day moving average, according to Nihei. The last time the euro traded below $1.4520 was on Sept. 14. Should it break that level, the euro may drop toward $1.4281, which represents a 76.4 percent Fibonacci retracement from this year’s low of $1.2457 reached on March 4, Nihei said. Support is where buy orders may be clustered. The euro was at $1.4652 as of 7:58 a.m. in Tokyo from $1.4666 in New York yesterday.

Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break above resistance or below support indicates a currency may move to the next level. 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.

Snozawa1@bloomberg.net .

A break in the yen below 89.50 per dollar would “rechallenge” 87.15, wrote Thomas Anthonj, a technical analyst at JPMorgan Chase & Co. in London in a note yesterday. The yen reached 87.13 on Jan. 21, the strongest level since 1995.

Barclays Capital lowered its three-month forecast for the dollar to $1.52 per euro yesterday, from $1.40. “Excess liquidity” stems from a Fed monetary policy that’s “buoying risky assets indiscriminately while punishing” the greenback, wrote David Woo, global head of foreign-exchange strategy in London in a note.