singapore jan 17 reuters  the dollar drifted off multimonth lows on tuesday while the yen was perched near sevenmonth highs as investors held their breath for a potential policy shift at the bank of japan the euro reached a ninemonth high on monday at 10874 but was last loitering around 10830 the yen hit a top of 12722 per dollar during asia hours on monday before easing a little during a holidaythinned us session to sit around 12840 speculation is building about a change or end to japanese yield curve control given that the market pushed 10year yields above a ceiling set by the bank of japan boj of 05 on friday and monday and that the amount of bond buying to defend it is starting to look unsustainable a newspaper report last week has also stoked expectation for a change so traders are on the lookout for a sharp reaction even if the boj makes no move the yen rose 3 against the dollar last week and oneweek implied volatility for dollaryen is at its highest since march 2020 the market has run pretty hard with this story and is looking for a follow up said tony sycamore an analyst at brokerage ig markets he sees three main possibilities no policy change a tweak similar to a move in december to widen the 10year yield target band and the total abandonment of yield curve control with the latter likely to drive the most extreme market response the yen would explode higher japanese government bond yields would explode higher and global yields would go higher he said in the meantime foreign exchange trade may be driven by chinese economic data due around 0200 gmt which is expected to be weak british labour data us earnings and canadian inflation figures the us dollar index bounced from a sevenmonth low of 10177 made a day ago and held at 10228 sterling touched its highest since middecember at 12288 and was last at 12199 annual growth in chinese gross domestic product for the fourth quarter is expected to be reported as only 18 so any upside surprise could lend support to tradeexposed currencies such as the aussie the australian dollar hit a fivemonth high just above 070 on monday and was last firm at 06972 the new zealand dollar held at 06394