The Japanese yen began 2016 on a high note, as it strengthened against the U.S. dollar on elevated global financial market uncertainties and consequential safe-haven flows. However, inadequate structural reform, enormous public sector indebtedness, hostile monetary easing, and unattractive interest rate differentials relative to other major economies are likely to put JPY back on its prior depreciating trend.

Irregular bouts of investor risk aversion are likely to support the yen and Japanese securities over the course of 2016.

Moreover, the internationalization of the Chinese Renminbi in global trade activity is also seen as a factor weighing on the yen.

"USD/JPY to close 2016 at 131, around 8% weaker since the end of 2015" - Scotiabank.