While the rally in U.S. dollar-yen has fizzled out over the past five months, foreign exchange strategists say the trade is not over yet.
"I think dollar weakness will keep dollar-yen range bound in the short-term, but the bias for longer-term is for it to head higher. The economy needs a weaker currency as it adjusts to the sales tax hike [in April]," Nizam Idris, head of strategy, Fixed Income and Currencies at Macquarie told CNBC. He forecasts the pair will hit 105 in the next six months.
Since hitting a 4-1/2-year low of 103.73 in late-May, the yen has appreciated around 5.5 percent against the greenback to trade around the 97.95 level on Japan's slowing reform momentum and the Federal Reserve turning more dovish.
The central bank is expected to postpone plans to wind down its $85 billion-a-month asset-purchase program to 2014 following the 16-day partial government shutdown, which resulted in a delay in the release of economic data and thousands of federal workers being furloughed.
(Read more: Aftermath of US shutdown continues to jolt dollar)