Oct. 4 (Bloomberg) -- The euro may extend its decline against the yen beyond the decade low reached today as momentum indicators suggest its downward path is intact, according to Forecast Pte.
The trend for the euro’s weekly moving average convergence/divergence, or MACD, “is definitely still down,” said Forecast technical analyst Pak Lai Ng. The currency’s MACD was at minus 1.8267 versus the yen today, less than the signal line of negative 1.6881, Bloomberg data showed. A reading below the signal line signals weakness.
The euro traded at 101.25 yen as of 12:07 p.m. in Tokyo from 100.97 in New York yesterday, after earlier falling to 100.76, the least since June 2001. It may slide to as low as 96.84 yen, a level last seen on Dec. 11, 2000, Ng said.
“Euro-yen still looks very weak,” Singapore-based Ng said. “The first target will be at the 100 level. After that, it may drop to around the 99 level, and then to the Dec. 11, 2000 low.”
Successive, weekly lows reached by the euro are further evidence that it will depreciate further, Ng said. The shared currency slid for a fifth-straight week in the five days ending Sept. 30, finishing at 103.12 yen.
MACD is calculated by subtracting the 26-day exponential moving average from the 12-day average. The signal line is a nine-day exponential moving average of the MACD, and provides buy and sell signals. In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.
--Editors: Rocky Swift, Naoto Hosoda
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