Reports that the Bank of Japan is likely to discuss the reduction of bond purchases as early as next week has prompted hedge funds to pivot on yen options trades and up their bullish bets on the currency, according to a report by Bloomberg.

After piling into bets last month that the yen would fall back below 160 against the US dollar, funds are now buying yen call options, which gain in value if the currency strengthens against the dollar.

The dollar-yen fell back below 155 on Tuesday, according to Bloomberg, with a stronger yen making the carry trade less alluring.

While "cconcerns around possible quantitative tightening by the BOJ have spooked the market,” according to Ruchir Sharma, London-based global head of FX option trading at Nomura International, disappointing US economic data has also weighed on the dollar by sending US yields lower.