The Japanese yen (JPY) continues to weaken against the U.S. dollar (USD), as the greenback gets support from improving risk appetite and better economic data coming from the U.S.

The yen outperformed the USD last year amid demand for safe-haven currencies due to European debt crisis, uneven U.S. economic recovery and slowing global growth.

We believe that the recent period of 'Endaka' - or a strong Japanese yen (JPY) - is ending, giving way to a major reversal and 'Enyasu' - or an inexpensive yen. This reversal will take some time and be punctuated by periods of temporary strength, said a note from the Standard Chartered.

Japanese economy, the world's third largest, still struggles to recover from the devastating Tohoku earthquake last year, besides being impacted by the floods in Thailand.

Japan's underperformance relative to the rest of the G10 is striking, with real gross domestic product (GDP) remaining more than 3 percent below pre-crisis levels, underscoring the headwinds that the Japanese economy continues to face, Standard Chartered said.

Japan recorded its first trade deficit in 2011 in more than two decades, raising concerns that the country could post persistent current account deficit.

On the positive side, Japan's economy should see more benefit this year from large-scale post-earthquake reconstruction programmes, via construction orders and housing starts. However, fragile global demand, the supply-chain impact of the Thai floods and JPY over-valuation remain downside risks to the economy. The impact of much-needed fiscal reforms will be a further negative for growth, said the note.

However, the recent fall in strength of the yen seems to be a big relief for the Bank of Japan (BoJ), as the strong yen had prompted the central bank to intervene massively in the currency markets last year to stem the appreciating yen.