The yen looks like it's ready to get crushed

Passers-by are reflected on an electronic board showing Japan's Nikkei stock average and the Japanese yen's exchange rate against the U.S. dollar (top) at a brokerage in Tokyo, November 17, 2014.
Issei Kato | Reuters
Passers-by are reflected on an electronic board showing Japan's Nikkei stock average and the Japanese yen's exchange rate against the U.S. dollar (top) at a brokerage in Tokyo, November 17, 2014.

For those seeking a new reason to bet against the Japanese yen, here's one: a triple-dip recession in Japan.

Japan has slipped back into recession, with the economy shrinking 1.6 percent in the third quarter, surprising economists who forecast it would grow 2 percent.

The takeaway?

Double down on the dollar versus the yen.

How weak can the yen get?

Forecasters are lowering their already bearish targets after the new disappointing economic data.

"I'd expect another 20 percent drop next year, which would take us north of 140," said Peter Boockvar of the Lindsey Group about the dollar-yen rate.

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The team at Capital Economics raised their forecast for dollar-yen to finish next year at 140 as well, up from 120 previously.

Those are bold calls, because it's unusual for any currency to move more than 5 percent to 10 percent per year. Also, the yen has already tumbled 14 percent in the past 12 months and 19 percent the previous year, making it the worst-performing major currency against the dollar both years.

But when it comes to the yen right now, it seems, no forecast is too bearish.

"When I started in the business, dollar-yen was 230," recalled David Rosenberg, chief economist and strategist at Gluskin Sheff. "For those that think this move is over, this is probably going to be a round trip, meaning that the dollar's run-up against the yen has a lot further to go."

Economists and strategists predict the new recession will force politicians to postpone another planned increase in the country's consumption tax, along with an unscheduled election, and perhaps even ramp up quantitative easing even further.

"From here, the news will come fast and quick as Prime Minister (Shinzo) Abe (has called) a snap election in order to gain a mandate to postpone the hike in the consumption tax planned for next year…. This is not the end of the yen's devaluation…," Kit Juckes, a forex strategist at Societe Generale wrote.

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"The Bank of Japan will maintain a policy of very low interest rates so that the reallocation does not disrupt Japanese financial markets," wrote David Kotok, chairman and CIO at Cumberland Advisors. "The recent recession news means that this policy will be in place even longer and more robustly than expected just one week ago."

In other words, lower for longer and easier than easy is how the pros are interpreting how the recessionary headlines will impact policy for interest rates and monetary stimulus.

Some are worried the trade is getting played out, with the yen already weakening 12 percent against the dollar in the last three months.

The other concern: It's growing to be a crowded, consensus position, which means the move has potential to snap back.

Still, strategists say, the forces weighing on the yen have become too powerful.

Read MoreAbe's 3 ways to fix Japan's economy

"Although dollar-yen looks overbought technically, it is inadvisable to fight the trend when Japanese policymakers are intent on weakening the currency," wrote Alvin Tan, director of foreign exchange strategy at Societe Generale.

"Japan's technical recession in the wake of this weekend's dismal GDP data highlights the need for further policy action," he added.

"In short, Japan's drop back into recession will strengthen disinflationary pressures and reinforces the divergence in the prospects for monetary policy relative to those in the U.S.… Bank of Japan has just stepped up its asset purchases and will probably have to do substantially more," Capital Economics analysts wrote.

And if you're worried about a wave of volatility sweeping equities and other risk assets, during which times the yen typically strengthens as a safe haven, Capital said you can now forget it.

"Japan's economic fundamentals have deteriorated to the point where many investors are not likely to see the yen as a safe haven in times of stress," they said.

It looks like the trade of the decade is just starting to take off.