"The general upward move in dollar/yen will continue due to expectations of more easing after a new BOJ governor is appointed in April," said Bernd Berg, global FX strategist at Credit Suisse, adding that the dollar could rise to 92 yen in the next few months.
Current BOJ Governor Masaaki Shirakawa's term ends in April and markets are positioned for further yen weakness as most expect him to be replaced by someone whose stance on aggressive policy easing matches that of Prime Minister Shinzo Abe.
The euro was down 1.0 percent on the day at 118.16 yen, though off a session low of 117.31. The euro was hurt against the yen by a German newspaper report saying Germany's regulator had ordered large banks to simulate a break-up.
A report showing U.S. home resales unexpectedly fell in December added to volatility and pressure on the euro and dollar though the data was not seen as enough to derail the boost housing will likely provide to the economy this year.
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Against the dollar, the euro was nearly flat at $1.3317. While the euro has struggled to break above the $1.34 level since it hit a near 10-month high a week ago, strategists said it was likely to remain firm as concerns around the euro zone crisis ease.
The German ZEW figures beat all expectations, a sign that the euro zone crisis was no longer hitting Europe's largest economy as hard as it was last year.
"The euro can cross the $1.34 mark to reach $1.35 as early as the end of this week if data out of Germany continues to be strong," said Joerg Angele, FX strategist at Raiffeisen Bank International in London.
But Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, cautioned that failing to breach $1.34 may mean a near term-top is in place for the euro.