Expectations of further Fed rate increases haven't peaked yet, while rate hikes by the Bank of Japan are a long way off. Along with Japanese investors continuing enthusiasm for overseas assets, that will likely push up the dollar in coming weeks.

Short-term rate expectations remain the single most important factor for dollar/yen,

The trade surplus figures showed strong exports and domestic demand. This shows the economy is robust enough to withstand a rate increase later this year, supporting the yen.

The markets have already priced in at least one rate hike and are beginning to price in the second rate hike by year-end. Combined with the steady recovery of the Japanese economy, those expectations are likely to push up the yen.

Press reports are pointing to a BOJ move as early as March, but I think the majority of market participants don't believe that story because such a shift could create volatility before fiscal year-end in March.

The BOJ is expected to end its so-called quantitative easing policy of flooding the economy with cash by the end of April. That will put upward pressure on short- term interest rates and reduce liquidity in the money markets, which is yen positive for sure.