Japan's central bank has begun a two-day policy meeting that is widely expected to lead to fresh measures to boost the economy.

The country's government has been pushing for the Bank of Japan to adopt a two per cent target for inflation.

However, it seems more likely that the bank will choose to expand its asset purchase programme.

All of 23 economists surveyed by Bloomberg News said that would be the path taken by the bank, with the median estimate for a 10 trillion-yen increase.

Ahead of the meeting, the Yen strengthened against all 16 of its major counterparts after dropping 13% against the dollar in the past three months.

"Technical indicators signalled the yen's decline may have been overdone and data showed traders became the least bearish on the currency in eight weeks," noted Alin Puian from the Institute of Trading and Portfolio Management.

Japanese Prime Minister Shinzo Abe has put pressure on the central bank to take more aggressive measures, causing the yen to fall and the stock market to rise.

"The main downside risk for the yen we believe would be any announcement or hints that the BOJ was studying which assets should be purchased as it expands its balance sheet," said Derek Halpenny, a currency strategist at the Bank of Tokyo-Mitsubishi UFJ.

"Any hints that the BOJ was considering moving away from Japanese government bonds to purchase say riskier assets or...foreign bonds would certainly drive the yen weaker," Halpenny wrote in a research note.

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