Henderson chief economist Simon Ward believes the yen, rather than the US dollar, could be the big winner from a loss of confidence in the euro.
More fund managers - a net 51% - believe the yen is overvalued than any other currency, according to the latest Merrill Lynch global survey. Ward says this suggests they are not positioned for further strength.
"The perception that the yen is expensive may reflect its nominal effective, or trade-weighted, exchange rate, which is only 3% below its all-time high reached in January 2008," he says.
"A correct assessment, however, should be based on the real effective rate, adjusting for Japan's superior inflation performance. This remains below its long-run average."
Ward believes relative monetary policies are also an influence on currency performance.
"Real official interest rates, the relative to the annual rate of change of consumer prices, are much higher in Japan than the rest of the G7," he adds.
"The 3.2 percentage point gap with the US is the largest since 1980.
"The Fed and ECB have responded to market turbulence by expanding the monetary base. The Bank of Japan has yet to follow.
"Fed liquidity injections, if sustained, could limit further US dollar gains, deflecting upward pressure onto the yen."
