Speculation over central bank intervention was doing the rounds on Friday; it is thought that the Swiss National Bank and the Bank of Japan have intervened in the currency markets in order to halt the appreciation of their respective currencies over the euro.
On the risk of Greece leaving the Eurozone, international fund managers continue to favour defensive positions in order to protect them from the currency risk that arises from fear of a monetary union breakup. Funds are fleeing to refuge currencies, such as the US dollar, the Japanese yen and the Swiss franc, in order to hedge against the aforementioned risk.
Japan and Switzerland are in a difficult situation because both are export-based economies that benefit from a weaker currency.
In terms of technical analysis, analysts at Digital Look have said the euro/yen is anchored to the psychological suport level of 100. "However, there is a shoulder-head-shoulder formation in play with a theoretical price target of 97.80. Meanwhile, oscillators such as the stochastics and relative strength index are showing bullish divergences. They point to a move higher to ease the excess oversold levels."
"Short-term traders may be inclined to open long positions with a primary target of 102.00 if there is a move above 100.56. The stop-loss order should be set at 100.00. On the other hand, a move below 99.367 may extend the bearish move towards 97.80," the said.
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