The Japanese yen was higher against its major opponents in the Asian session on Tuesday, on hopes that the Bank of Japan will alter its easy policy in 2023.

Nikkei reported during the weekend that BoJ is likely to raise inflation forecasts this month, with price growth nearing its 2 percent target in fiscal 2023 and 2024.

Such a move could trigger expectations that the BoJ could discuss an exit from ultra-loose monetary policy upon achieving inflation target.

Investors looked ahead to the release of the minutes of the Federal Reserve's December policymaking meeting on Wednesday as well as U.S. payrolls data, due to be released on Friday, for clues on the Fed's next move.

Traders also reacted to IMF head Kristalina Georgieva's warning that 2023 is going to be a tough year as the main engines of growth, namely the US, Europe and China, are all experiencing weakening activity. She added that a third of the world will fall into recession in 2023.

The Japanese yen climbed to more than a 7-month high of 129.50 against the greenback, from a 4-day low of 131.40 seen earlier in the session. The pair had ended yesterday's deals at 130.61.

The yen appreciated to more than 3-month highs of 155.84 against the pound and 137.99 against the euro, off its previous lows of 158.38 and 140.01, respectively. The currency is likely to find resistance around 149.00 against the pound and 136.00 against the euro.

The yen firmed to near a 3-month high of 81.44 against the kiwi and near a 2-week high of 87.87 against the aussie, following its early lows of 83.06 and 89.32, respectively. The currency is seen facing resistance around 78.00 against the kiwi and 84.00 against the aussie.

The yen touched 139.79 against the franc, its highest level since August 5. On the upside, 122.00 is possibly seen as its next resistance level.

The yen advanced to near a 1-year high of 95.47 against the loonie, after falling to a 4-day low of 96.87 in early deals. Next key resistance for the yen is seen around the 90.00 region.

Looking ahead, at 8.00 am ET, Destatis publishes Germany's flash consumer and harmonized prices for December.

U.S. ISM manufacturing PMI for December and construction spending for November are set for release in the New York session.

Grafico Cross US Dollar vs Yen (FX:USDJPY)

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Grafico Cross US Dollar vs Yen (FX:USDJPY)

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