Sept. 2 (Bloomberg) -- The euro may extend its losses to a five-month low versus its Japanese counterpart after falling below 109.91 yen, Gaitame.com Research Institute Ltd. said, citing trading patterns.
A close below the level, which represents the middle of a range called a descending channel that the currencies have been trading in since April, may weaken the 17-nation euro to the 106-yen level, according to Takuya Kawabata, a researcher in Tokyo at the unit of Japan’s largest foreign-exchange margin company.
“Breaching the middle point of the downward trend channel, the euro will be headed to the 106-yen level where the descending channel base lies,” Kawabata said. “The euro’s bearish trend against the yen is likely to continue as long as the currencies stay in the range.”
The euro traded at 109.66 yen as of 8:22 a.m. in Tokyo from 109.70 yen in New York yesterday. It has fallen 11 percent from the April 11 high of 123.33 yen.
The European currency sank to 106.61 yen on March 17, when Japan’s record earthquake and ensuing tsunami prompted investors to buy the yen as a refuge.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
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