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June 8 (Bloomberg) -- The euro may fall against Canada’s dollar with a pattern of closing prices showing the shared currency’s strengthening trend reaching resistance, according Lloyds Banking Group Plc citing technical analysis.
The pattern of closes in comparison with earlier highs show the euro-Canada is now “exhausting,” Lloyds technical strategist Tim McCullough said in a telephone interview. Today’s high coincided with a short-term pattern saying the rally that started on May 11 touched a short-term peak, he said.
“The market has now rallied, but the down trend from the end of 2008 into the middle of 2010 is still intact,” he said. “That downturn provides a level a resistance on a medium-term basis. That level comes in at C$1.4391, that’s almost where we’ve been trading today.”
The euro touched C$1.4380 today, its highest level since February 2010 against the Canadian dollar. The shared currency may weaken to C$1.3865 against the Canadian currency, which is nicknamed the loonie, within the next two weeks and may fall to C$1.3570 during the next couple of months, McCullough said.
European Central Bank Jean-Claude Trichet this week gave his first signal that he endorses encouraging investors to buy new Greek bonds to replace maturing securities, potentially making the debt situation more sustainable. The euro appreciated 5.5 percent against the Canadian dollar from its May 11 low through today’s C$1.4380 high.
In technical analysis, investors study charts of trading patterns to forecast changes in a currency, commodity, security or index. Resistance is a level where orders to sell a currency may be clustered.
--With assistance from Allison Bennett in New York. Editors: Paul Cox, Dave Liedtka
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