The euro may fall to a two-month low against the dollar after dropping below support levels on two different Fibonacci charts, Bank of Tokyo-Mitsubishi UFJ Ltd. said, citing trading patterns. The euro “easily broke below” $1.4217, a 23.6 percent Fibonacci retracement of its rally from a June 2010 low to a May high, as well as $1.4148, a 38.2 percent retracement of its advance from a January low to the May peak, said Teppei Ino, an analyst at the unit of Japan’s largest bank in Tokyo. “The euro’s decline will accelerate after breaching the $1.40 level,” Ino said. The currency now has a “potential downside target” of $1.3770, a 38.2 percent retracement of the rally from the June 2010 low to the May high, he said. The euro traded at $1.4153 as of 12:18 p.m. in Tokyo after strengthening from last year’s low of $1.1877 set on June 7, 2010, to as high as $1.4940 on May 4. The last time the currency traded at $1.3770 was on March 11, the day Japan was struck by its record earthquake. Fibonacci analysis is based on a theory that prices rise or fall by certain percentages after reaching a high or low. Key percentages include 38.2, 50 and 61.8 and 76.4. A break above resistance, where sell orders may be clustered, or below support, where there may be buy orders, indicates a currency may move to the next level. In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index. To contact the reporter on this story: Shigeki Nozawa in Tokyo at snozawa1@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.netQ

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