The yen was expected to be weaker this year after the new government elected in December pledged to pressure the Bank of Japan to do more to invigorate the economy and weaken the currency, the Financial Times reported Tuesday.
"One of our key views for 2013 is a move higher in the dollar-yen, which ... is based on the potential for a 'new BoJ' that is more proactive in terms of easing when the new governor of the BoJ is appointed in April 2013," Jens Nordvig, a strategist at Nomura, told the Times.
Analysts at Morgan Stanley also said they expected a "significant and sustained weakening" of the yen during 2013 "as we anticipate the yen taking on a broader funding currency role."
The analysts at Morgan Stanley said they think euro could reach $1.34 in the first quarter but then slip to $1.25 by the third quarter, the Times said. The analysts forecast Europe's Central Bank will take more action to stimulate the economy, tamping down on the euro.
Deutsche Bank forecast the euro could hit $1.35 in the first quarter as speculators close their short positions in the currency, the Times said. However, bank analysts indicated they thought the euro would fall to near $1.20 as the year proceeds.