The euro may rise against the yen to its strongest level in more than four months, providing it doesn't fall below a level of so-called support, Commerzbank AG said, citing trading patterns.
The 17-nation shared currency may extend last week's 1.4 percent drop versus the yen before rebounding, technical analysts Karen Jones and Axel Rudolph in London wrote in an e- mailed report today. It may appreciate to 104.81 yen, a level not seen since May 4, after the setback, they wrote.
"For recovery to remain viable, the slide lower must hold over the 99.55" yen per euro level, the analysts said. "Beyond a near-term downside correction, we continue to target 104.59/81. This is a double Fibonacci retracement," representing a 23.6 percent recovery of the euro's decline from 2009 to its low this year, and a 61.8 percent retracement of the 2012 drop, the analysts said.
The euro dropped 0.8 percent to 100.69 yen at 2:08 p.m. in London. It has fallen for five consecutive days, the longest run since May. It weakened 0.6 percent to $1.2906.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a bond, commodity, currency or index. Support refers to an area where technical analysts anticipate buy orders to be clustered.
Fibonacci analysis is based on the theory that securities tend to rise or fall by specific percentages after reaching a high or low.
