June 27 (Bloomberg) -- The euro may decline to as low as 110.1 yen should it breach a key support level against the Japanese currency, Commerzbank AG said.
"Euro-yen has tested the 200-day moving average at 113.96," Karen Jones, head of fixed-income, commodity and currency technical analysis at Commerzbank in London, wrote in an e-mailed report today. "It is sidelined near-term, but the risk is on the downside."
The 17-nation currency appreciated 0.1 percent to 114.28 yen as of 9:28 a.m. in London. It last reached 110 yen on March 17, and reached 105.44 yen on Aug. 24, the least since 2001.
"Focus is on the 200-day moving average at 113.96, the 55- week moving average at 113.13 and the 61.8 percent Fibonacci retracement at 112.93," Jones wrote. A sustained break below 112.93 "will target 110.10, the 78.6 percent retracement of the rally higher from the spike low."
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, currency or index. A support level is an area on a chart where analysts anticipate orders to buy a currency to be grouped and a resistance level is an area where they anticipate sell orders to be clustered.
Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low.
