Meera Chandan, co-head of global foreign exchange strategy at JPMorgan, said the yen was in a fairly unstable region given the lack of action by the Bank of Japan.

"if the market adjusts expectations for the Fed and the last 30 basis points of interest rate cuts are removed, the dollar-yen can easily rise 3 to 5 per cent," she said in an interview on Tuesday.

"if the weak yen is indeed a policy concern for Japan, then they need to change their monetary policy, and the fact that they choose not to do so is open to further weakness.ArcadeparadiseThe light is green, "Chandan said.

This week's US data and Fed meeting will determine the direction of US yields.

Chandan said that if the US data were strong, the dollar could rise, but the Japanese authorities' foreign exchange intervention would not be so effective because the weak yen was due to wide policy differences.

"what the BoJ wants, frankly, and perhaps what most Asian central banks want, is that the Fed and US inflation data do work for them," she said. "US yields have to fall sharply before the yen and the rest of Asia can really make a comeback."