Aug. 2 (Bloomberg) -- The euro may climb to $1.39 this month for the first time since February as Europe’s sovereign debt crisis stabilizes and the Federal Reserve moves closer to providing additional stimulus, according to Citigroup Inc. The 16-nation currency today broke through its “last” area of resistance versus its U.S. counterpart at $1.3080 to $1.3115, rising as much as 1.1 percent to a three-month high of $1.3195. The euro traded close to $1.31 every day last week, failing to close above the level. The key break, and a close above the $1.31 level today, may push the currency to its 200-day moving average of $1.3580 and beyond it to $1.39, a level not seen since Feb. 4, said Tom Fitzpatrick, chief technical analyst at Citigroup Inc. in New York. “The overall picture still looks very constructive,” Fitzpatrick said in a telephone interview. “We’re looking at an environment that’s a combination of a slightly weaker dollar, it’s equity markets doing well, commodity markets doing well, it’s a very pro-risk environment.” The euro rose 0.9 percent to $1.3174 at 2:55 p.m. in New York. Its high today of $1.3195 was the strongest level since May 4. The Standard & Poor’s 500 Index rose 2 percent and the Reuters/Jefferies CRB Index of raw materials added 0.9 percent. Euro Path The shared currency fell to a four-year low of $1.1877 on June 6 amid investor concern that a sovereign debt crisis started in Greece would spread to the rest of the region. A $750 billion euro ($988 trillion) fiscal package and the results of a region-wide banking stress test, which found only 7 of 91 European Union banks failed, helped bolster confidence that the region could resolve its debt problems. The euro’s “stabilization” is illustrated by the recent narrowing of the spread between bonds of debt-riddled nations, such as Greece, and those of Germany, Fitzpatrick said. The extra yield investors demand to hold 10-year Greek debt instead of similar-maturity benchmark German bunds narrowed to 749 basis points today from a high of 965 basis points reached May 7. A basis point is 0.01 percentage point. In technical analysis, investors study charts of trading patterns to forecast changes in a security, commodity, currency or index. A support level is an area on a chart where orders to buy a currency versus a counterpart may be placed, potentially blocking a decline. Resistance is the opposite, and an advance above those levels typically indicates further gains. --Editors: Paul Cox, Dave Liedtka To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net. To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net.

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