The euro consolidated recent gains versus the U.S. dollar and gained ground versus the Japanese yen Friday as equity markets continued their rebound.
The impact of the Swiss central bank's decision Thursday to begin intervening in foreign exchange markets to halt the Swiss franc's rise versus the euro also helped underpin the single currency, strategists said.
The Swiss move is a boon to Eastern European borrowers. Households and businesses took out billions of dollars in Swiss franc-denominated loans in recent years, though largely from banks in the euro zone.
Debt service worries have raised fears about the euro-zone's exposure to Eastern Europe, so moves to weaken the franc provide a modicum of relief for the euro zone and are generally supportive for the euro, said Stephen Gallo, head of market analysis at Schneider Foreign Exchange.
The euro rose to its highest level versus the dollar in more than two weeks in early trade Friday, but erased gains as the morning wore on.
The euro traded at $1.2922, little changed from $1.2914 in North American trade late Thursday.
The euro gained 0.4% versus the Swiss franc, changing hands at 1.5371 francs after surging more than 3% to its highest level of the year versus the Swiss unit in the wake of Thursday's announcement by the Swiss National Bank. See story about SNB decision.
The single currency was up 0.9% versus the Japanese currency to 127.08 yen.
The euro has tended to move higher amid stronger equities, while the dollar and Japanese yen have retreated. The opposite has largely been true amid rising economic worries and falling equities.
Asian equities rose overnight, with European stocks following suit. U.S. stock-index futures were slightly higher. See Europe Markets.
The dollar rose against a broadly weaker Japanese yen to trade at 98.44 yen, up from 97.72 late Thursday.
Meanwhile, some strategists question whether the Japanese yen has fully lost its luster as a popular safe-haven currency. Last fall, the yen was the ultimate beneficiary of plunging global equities and rising financial turmoil as traders unwound once-popular carry trades or sought refuge in the Japanese currency.
That relationship appeared to weaken this year amid a rising focus on Japan's own deep economic woes and ideas that deleveraging in favor of the yen had largely run its course.
But analysts say repatriation flows have kept the yen afloat, and that shifts associated with the end of the Japanese fiscal year-end on March 31 should continue to underpin the currency. See full story.
The dollar index tracking the currency against a trade-weighted basket of rivals, was at 87.378, up from 87.361 late Thursday.
The U.S. currency improved against some of its main counterparts after a report showed the U.S. trade gap narrowed to the smallest in six years. See more on trade deficit.
