USDJPY has breached the 110 level for the first time since August 2008. This is due to a combination of investors believing encouraging US data will prompt the Federal Reserve to raise interest rates, and further weakness in the Japanese economy.

Saxo Bank's John Hardy says this trend in dollar yen could continue, and if the US data proves to be particularly strong, we could even see a move toward 112.50.

But he also warns investors there’s a two-way risk for the cross, because if we get a big shock in US data, it could just as easily reverse. If we do see a stronger yen, John thinks the Japanese currency will be stronger against the euro and commodity currencies. Meanwhile, The Bank of Japan (BOJ) is gearing up to meet next week and many analysts expect a move from the central bank to ease monetary policy further.