Tags: Barclays | BNP | Citigroup | Dollar | Decline | Fed

Barclays, BNP, Citigroup: Dollar to Extend Decline on Fed Stance

Wednesday, 22 Sep 2010 02:56 PM

Barclays PLC, BNP Paribas SA and Citigroup Inc. said the dollar may extend losses against the euro after the Federal Reserve signaled it may implement further easing measures and prompted the currency pair to trade above a key technical level.

The euro surged past its 200-day moving average yesterday for the first time since May 2009 after U.S. policy makers said that they “will provide additional accommodation if needed” to spur growth. A weekly close above the moving average could drive the dollar to weaken to $1.4720 or $1.5145 per euro by the end of the year, according to Citigroup, who said before the Fed’s statement that the euro could fall to $1.22 or $1.26.

“The Fed being prepared to do something, a little bit closer to engaging in new quantitative easing, that’s what’s helping slide it through,” said Tom Fitzpatrick, chief technical analyst at Citigroup in New York. “Given how reliable the 200-day moving average has been over the last four years, having gotten that break now, the likelihood of that down move taking place seems much lower.”

The dollar dropped 0.9 percent to 1.3379 per euro as of 1:14 p.m. in New York, after touching $1.3440, the lowest level since April. The euro rose above its 200-day moving average of $1.3214 yesterday after the Federal Open Market Committee released a statement at 2:15 p.m. following the conclusion of its policy meeting.

Barclays, also citing a weekly close above the moving average, said the euro may rally to $1.38 or $1.40. The firm in August forecast the euro would end the year at $1.28, according to data compiled by Bloomberg.

Moving Average

The 16-nation currency May rise to $1.40 by late October or early November, Andrew Chaveriat, a New York-based technical analyst at BNP Paribas, said yesterday. The firm had previously estimated that the euro would depreciation to $1.15 by the end of 2010, according to data compiled by Bloomberg.

The euro last broke through the 200-day moving average versus the dollar in May 2009, prompting a rally to $1.5144 in November. When the currency pair broke below the moving average in January, the euro tumbled to as low as $1.1877 in June.

The median forecast of 40 contributors surveyed by Bloomberg News is for the euro to finish the year at $1.28.

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Barclays PLC, BNP Paribas SA and Citigroup Inc. said the dollar may extend losses against the euro after the Federal Reserve signaled it may implement further easing measures and prompted the currency pair to trade above a key technical level.The euro surged past its...
Barclays,BNP,Citigroup,Dollar,Decline,Fed
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2010-56-22
Wednesday, 22 Sep 2010 02:56 PM
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