FX.co ★ USDJPY - Yen dancing around 130

The yen started 2023 with modest gains on Monday as traders weighed the risk of further technical strength amid thin holiday trading.

The Japanese currency rose 0.3% to 130.77 per dollar in early trading in Tokyo. A close below the dollar-yen's August low of 130.41 would open up the door for further declines in the pair, according to chart watchers.

Some investors were opening small short-dollar positions in case a break occurs in the absence of normal market liquidity, said some Asia-based currency traders familiar with the transactions who asked not to be named because they were not authorized to speak publicly.

The yen is up about 16% from its October low amid government intervention, hopes for slowing US rate hikes and speculation about a possible policy shift from the Bank of Japan this year. The BOJ's unexpected December decision to tweak its yield curve control parameters is seen by many as a sign that its ultra-easy monetary policy might soon be coming to an end.