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The euro may be nearing an “explosive breakout,’’ reaching record levels against the U.S. dollar, according to a Citigroup Global Markets Inc. research note.

The trading pattern, including a so-called double-bottom that tested lows, resembles the one before Feb. 26 that preceded the surge to $1.6019 per euro, analysts Tom Fitpatrick in New York and Shyam Devani in London wrote in the note today.

“ We cannot help but feel that things might be about to get very bad again,’’ the analysts said, referring to the possible combination of falling bond yields and rising oil prices.

The exchange rate may approach $1.69 per euro by September if previous patterns are duplicated, the report said.

The dollar fell to a two-month low, trading at $1.5864 at 12:35 p.m. in New York, down 0.5 percent from $1.5793 yesterday. It earlier touched $1.5887, the weakest since April 24. The dollar reached an all-time low of $1.6019 per euro on April 22.

Chinese Premier Wen Jiabao has again called on the United States to stabilise the dollar, warning the greenback’s decline was posing threats to the global economy.

“China is taking measures to safeguard its stable economic development,” Wen said during a meeting with visiting US Secretary of State Condoleezza Rice on Monday, according to a statement posted on the foreign ministry’s website.

“(We) hope the US will overcome its subprime crisis soon and stabilise the exchange rate of the US dollar, which is significant to the whole world,” he said, according to the transcript posted late on Monday.

The Chinese currency, the yuan, has appreciated about 20 percent against the dollar over the past three years, which has placed enormous pressure on China’s exporters and forced some out of business.

China’s foreign exchange reserves, by far the largest in the world, hit 1.80 trillion dollars at the end of May, meaning even a small decline in the value of the dollar could cause a big loss to the Chinese treasury’s coffers.

It was the second time this year that Wen had spoken out against the weak dollar and problems in the US economy, and the impacts for China.

“The impact of the US subprime mortgage crisis is expanding, (and) the value of the dollar is continuing to fall,” Wen told China’s annual meeting of parliament in March.

“China is now in a critical period in its reform and development, and we must be fully prepared for changes in the international environment and become better able to defuse risks.”

Soaring commodity costs are denting manufacturing activity in Asia and Europe and the outlook looks bleak as new orders drop off in the face of rising prices, surveys showed on Tuesday.

Manufacturing activity in the euro zone contracted in June for the first time in three years while business confidence in Asia’s largest export markets is buckling and output has likely contracted further in the United States.

Purchasing managers indices showed manufacturing activity in the euro zone fell to 49.2 in June, China saw its index fall to a near three-year low of 52.0 while in Britain it contracted at its sharpest rate since December 2001.