The dollar may be on the “threshold of broad-based” weakness in the medium term, according to Citigroup Inc.
The euro may climb to $1.4720 should the currency close this week above so-called resistance between $1.3722 and $1.3739 against the dollar, Citigroup said. Resistance at $1.3722 is the May 13 high and $1.3739 is the March 19 high, based on Citigroup’s chart. Resistance is a level where sell orders may be clustered.
“In addition to a close on the week above $1.3739 solidifying this development, a weekly close above $1.3722 would be a bullish” sign, Citigroup analysts Tom Fitzpatrick in New York and Shyam Devani in London, wrote in research yesterday.
Europe’s single currency rose to $1.3931 as of 8:55 a.m. in London from $1.3890 in New York yesterday. It earlier reached $1.3978, the highest level since Jan. 2. The $1.4720 level represents the Dec. 18 high, Citigroup’s chart shows.
“From a medium to long-term perspective, we do not think it is inconceivable that a major double bottom could be forming here with a neckline at $1.4720,” the analysts wrote. “A weekly close through that level would be needed to confirm such a development and suggest as high as $1.70.”
The $1.7000 level would be a record high, based on data compiled by Bloomberg. The euro touched an all-time high of $1.6038 on July 15, 2008.
From Bloomberg News