The euro may extend its decline to a three-week low of $1.39 after completing a so-called death-cross pattern yesterday, Bank of Tokyo-Mitsubishi UFJ Ltd. said, citing trading patterns. The pattern was formed as the euro’s five-day moving average dropped below its 20-day one, a signal that further declines are likely. The 17-nation currency is also poised to keep weakening due to the presence of three declining trendlines, said Teppei Ino, an analyst at the unit of Japan’s largest bank. “The euro has been moving lower since May,” Tokyo-based Ino said in an interview. “The currency’s weakening trend may continue for another several months.” The euro traded at $1.4113 as of 6:40 a.m. in London after slumping as much as 1.6 percent yesterday. The currency was last below $1.39 on July 12. Ino said the three downward trendlines signaling further losses in the euro were those connecting the highs on May 4 and July 4, another joining the daily lows since July 28, and a third connecting the highs on July 27, Aug. 1 and yesterday. The common currency may decline to its 200-day moving average at $1.39 in about a week, Ino said. The euro is unlikely to break below that level after it rallied when it briefly breached the 200-day average on July 12, he said. A death cross refers to a situation where a short-term moving average drops below a longer-term one. The longer-term average often then becomes a level of so-called resistance, which sell orders may be clustered. 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.net

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