The yen (Exchange:JPYUSD=), which has been falling for five months, is within striking distance of the psychological 100-level against the dollar. So what could trigger a break through the key barrier? The answer, analysts say, could lie in U.S. economic data.
Japan's currency was trading at 99.25 per dollar on Tuesday, having fallen to as low as 99.88 on Monday.
But pushing through the 100-mark is proving tough and currency analysts say what the market needs is a fresh trigger.
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That's where U.S. economic data comes into play.
"The main thing that is stalling the run is the U.S. data that has slowed down a bit and is a little bit of an anchor on dollar-yen," said Boris Schlossberg, managing director at BK Asset Management said on CNBC's "Asia Squawk Box."
"If the U.S. data shows promise of perking up, then we have a stronger case for a break-out through 100. That's probably the only reason that the move has been capped," he added.
The yen has weakened more than 20 percent since mid-November, driven lower as Japan adopts an aggressive monetary policy to revive an economy that has been held back by two decades of deflation.
And Monday's bout of yen-selling came as finance ministers from the Group of 20 nations at the weekend refrained from criticizing Japan for pursuing the radical monetary policies that have driven the yen lower.
Bring on U.S. GDP
Analysts point to Friday's first-quarter U.S. economic growth numbers, the most closely-watched number from the U.S. this week, as a catalyst for the next dollar-yen move.
"I am in the camp that dollar-yen will trade between 95-100," said Robert Rennie, global head of FX Strategy at Westpac Bank in Sydney. "But the market clearly wants to break higher and if U.S. GDP data on Friday comes in at a strong number, and certainly a lot of the forecasts are for a number of 3 percent plus, that could be enough to take the dollar higher and dollar/yen with it."
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Recent weak economic U.S. data have dampened the optimism about the outlook for global growth seen at the start of the year. For instance, the latest jobs numbers show the U.S. economy created 88,000 jobs in March, the slowest pace of hiring in nine months.
"There is no doubt that we are in a 'Spring stall' that people are talking about and it's going to be very important to see how we navigate the next few months as far as the data goes," said BBK's Schlossberg.
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