The dollar will remain locked in a 19-month trading range versus the yen until it breaks through key technical levels and approaches its yearly high set in March, according to Bank of America Corp.
“This is not a trend, it’s a range-bound environment, and as you get up to the range highs you have to exhibit extreme caution,” MacNeil Curry, head of foreign-exchange and interest- rates technical strategy at Bank of America Merrill Lynch in New York, said in an interview. “All bets are not off until you see a break of at least 83.19, preferably 84.18.”
The dollar rose 0.4 percent to 81.72 yen at 12:21 p.m. in New York.
The dollar has strengthened 3 percent against the yen in the past week while remaining within a range of 75.35 yen per dollar to 85.53 yen since the March 17, 2011, earthquake and tsunami that rocked Japan. The nation’s currency has fallen at least 1 percent versus all of its 16 most-traded peers since Prime Minister Yoshihiko Noda on March 15 called for elections that polls show favor the opposition party, which supports further monetary stimulus.
“A lot of people are trying to climb on a trend here and the market is getting crowded quickly,” Curry said. “People need to exercise caution up here.”
A break above 81.88 will open up resistance at 82.67 yen, the 78.6 percent retracement of a March 2012 rally that saw the dollar reach 84.18, its 2012 high, Curry said. Resistance is an area where sell orders may be clustered.
To contact the reporter on this story: Allison Bennett in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Dave Liedtka at email@example.com