Bloomberg News

Euro May Weaken to 18-Month Low of $1.1875: Technical Analysis

December 12, 2011

Dec. 12 (Bloomberg) -- The euro is poised to fell to an 18- month low of $1.1875 after failing to follow through on a rally last week, Societe Generale SA said, citing trading patterns.

After the “bounce” on Dec. 9 proved short-lived, the 17- nation currency is now heading down toward so-called support at its Oct. 4 low of $1.3145, technical analysts Hugues Naka and Fabien Manac’h wrote today in a note to clients. If the currency drops below that level, the next target would be $1.2860, close to the weakest this year, they said.

“The likely break below $1.3145 should open the door to an extension of the medium-term downtrend” toward the June 2010 low of $1.1875, the Paris-based analysts wrote.

The euro weakened 1 percent to $1.3248 at 2:21 p.m. London time, after rising 0.3 percent on Dec. 9. The currency has fallen 7.7 percent in the past six months.

Support refers to an area on a chart where technical analysts anticipate orders to buy a currency and its related instruments. The stronger the support, the more selling is needed for a drop below that level.

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.

--Editors: Nicholas Reynolds, Mark McCord

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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