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Yen's Fall Stopped by 'Oops' Moment?

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Maybe it was a "lost in translation" moment, or maybe it was the end of an epic run. Either way, comments today from Japanese Finance Minister Taro Aso on the yen's weakness are reverberating through the forex market.

Even after Aso's comment that the yen had weakened "more than intended" was re-translated to "more than anticipated," the Japanese currency strengthened against the dollar and other currencies.

The remarks come a day after observations by the European Central Bank's Mario Draghi sent the euro sharply lower, and the combined official comments have broad implications, according to Alan Ruskin, global head of G10 FX strategy at Deutsche Bank. "Given that the most favored currency trades in late 2012 and 2013 have either had a financing leg in yen, or a long EUR component, the impact stretches to almost every combination of G10 pair and well beyond," he says.

But how lasting will the impact really be? There, opinions are divided.

Draghi's comments did serve to bring euro skeptics out of the shadows, and a number of strategists are expecting some medium term weakness in the common currency.

As for the yen, though, bullish views are just about impossible to find.

Rebecca Patterson, chief investment officer at Bessemer Trust, is clearly in the bearish camp.

"I don't think anything has changed in terms of Japan's desire to weaken the yen. I think today's yen strength is a knee-jerk reaction in a somewhat thin liquidity market, with more skittish investor sentiment amplifying the profit-taking on short yen positions," she told me. "I continue to believe the yen will weaken further this year, and would see pullbacks like this as an opportunity to add to a yen short."

Patterson points out that improving economic reports from the U.S. and China point to better prospects for the global economy. That will boost risk appetite, making the safe-haven yen less attractive. A stronger global economy will also spur Japanese investors to look for higher yield outside their country, reducing demand for the yen.

Omer Esiner, chief market analyst at Commonwealth Foreign Exchange, has a similar view. "it's still a bit too early to call a bottom in the yen's decline," he told me. "We still have considerable policy implementation as well as the appointment of a new BOJ governor in the months ahead. So for now, we're viewing this development as an exucuse for investors to book some profits but not yet a reversal of the overall weakening trend for the yen."

Others, though, see yen selling resuming eventually, but they view the impact of Aso's comments as more lasting. Deutsche Bank's Ruskin told me that "it's a definite pause to weaker yen, and a temporary turn that will be exacerbated by positioning." He thinks in the medium term, selling pressure will resume, but the yen will rise closer to 90 against the dollar before that happens.

With a G20 meeting looming, the timing of Aso's and Draghi's remarks was probably not a coincidence. Talk of a currency war is everywhere, and they have plenty of incentives to try to rein in their respective currencies.

(Read more: Currency Wars Return, 1930s Style: Who Will Lose Out?)

It's possible that Aso or Draghi - or both - will have more to say on their currencies ahead of the G20 confab. So while the expectations of yen weakness are running strong, Patterson cautions that it may make sense to hold off on yen trades until after the meeting "just in case there are more cautious Japanese comments, in an effort to appease other policymakers."

After that, it's time to get to work.

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