"Worries over possible risk aversion argue against a short JPY position," said Greg Gibbs, FX Trading Strategist at RBS. "However, the rapid deterioration in the external balance and widening in the real interest rate differential in favor of USD/JPY suggest pressure should build for it to rise to new highs."
Data from IG Markets support that view, and shows 66 percent of its more than 501 clients with open positions expect the dollar to rise against the yen.
"It feels like we're still in consolidation mode at the moment, with equity markets looking stable," said Kara Ordway, Forex Strategist at City Index in Sydney. "We have seen buying in USD/JPY so there still seems to be some expectation of yen weakness but still within the range we have seen over the past couple of trading weeks."
(Read more: Dollar chastened by weak US data)
Ordway said only additional Bank of Japan monetary easing measures, possibly via an expansion of asset purchases, would create meaningful yen weakness. But that "looks unlikely" until May or June, when the impact of a hike in the consumption tax becomes clearer.
Meanwhile, any further evidence of slowing growth in China may continue to take a toll on currencies including the Australian dollar, said Khoon Goh, senior FX strategist at ANZ. "Commodity currencies [will]struggle as weak China data weighs," he said.
However, Ed Ponsi, managing director of Barchetta Capital Management, said markets are now "somewhat used to the idea of a weaker China," and the further data weakness may not necessarily mean a "risk-off" reaction where emerging currencies, along with those of countries that trade heavily with them, are shunned.
—By CNBC's Sri Jegarajah