In Japan, the return of inflation has also led to bets on yen appreciation.
Traders expect the Bank of Japan to finally normalise policy after years of holding interest rates near zero. In the face of global interest rate hikes, the bank's ultra-loose policy was one of the reasons why the yen lost its safe-haven status last year.
The yen fell more than 24% against the dollar at one point. And a surge in interest in the yen could also mean more volatility for the currency.
"As the Fed's rate hike cycle draws to a close, which is likely to be the main driver of USD/JPY market action, Japan could be a country of heightened exchange rate volatility," said Tanvir Sandhu, chief global derivatives strategist at Bloomberg.
