By Julie Haviv NEW YORK, Jan 31 The U.S. dollar has reached its loftiest level in two-and-a-half years against the Japanese yen and investors expect the greenback to ascend ever higher peaks in coming months. The dollar, last trading at 91.08 yen has climbed over 16 percent since the beginning of the fourth quarter of 2012. The trend is likely to continue. The yen is one of the few major currencies with less attractive yields than the United States. With Japanese officials taking aggressive moves to weaken the yen, bets in the foreign exchange options market suggest investors see more dollar gains, perhaps even threatening the 100 yen level before long. Alessio de Longis, vice president and portfolio manager of the Oppenheimer Currencies Opportunities Fund in New York, said they have held a sizeable underweight in the yen since the middle of 2012, stepping up that bet in the fourth quarter. "This has been a very good trade for us and we continue to hold a very large underweight," said de Longis. The greenback could climb another 5 percent to 10 percent given the plans by monetary officials and the new administration of Prime Minister Shinzo Abe to weaken the yen. Japan's deputy economy minister, Yasutoshi Nishimura, recently said the yen's decline is not over and a dollar/yen level of 100, last seen in April 2009, would not be a concern. Strategists at Barclays revised their yen forecast on Wednesday, believing the dollar will hit 96 yen in six months and 100 in 12 months. A move of that magnitude would be necessary to significantly affect inflation in Japan, the firm said. The recent move comes shortly after the Bank of Japan doubled its inflation target to 2 percent and switched to an open-ended commitment to buy bonds, albeit in 2014. "For the BoJ to achieve 2 percent inflation the yen will need to weaken aggressively," de Longis said. The options markets shows demand for dollar calls, the right to buy dollars at a future date, has risen since last week, with three-month risk reversals, trading as high as 1.1 percent on Thursday versus a low of about 0.325 percent last week. Risk reversals measure the relative demand for options on the dollar rising and falling against the yen. Oppenheimer's de Longis, part of a global debt team that manages about $24 billion in assets, said the dollar could hit 95 in the second-half of the year on a reduction in safe-haven appetite and expectations of aggressive BoJ balance sheet expansion, though he warned pullbacks are likely. The BoJ and the U.S. Federal Reserve have both slashed rates close to zero, and Japan's 10-year Treasury note currently trades at a yield of 0.77 percent. Comments made by Japan's new Prime Minister Abe that he expected the BoJ to achieve its 2 percent inflation goal as soon as possible have added to yen selling pressure. GOING THE OTHER WAY? Some believe the dollar's one-way direction may have lost some momentum, partly because the BoJ's announcement was not backed up by any sizeable increase in asset purchases. "The headlines were big, but the substance more moderate," said Jens Nordvig, global head of currency strategy at Nomura Securities in New York. "We think the policy catalysts for yen weakness are running out of steam and are looking for range trading." Anjun Zhou, head of multi-asset research at Mellon Capital in San Francisco, said over the course of the past month they became less overweight the yen because U.S. Fed remains the more aggressive of the central banks. "The Federal Reserve has committed a lot more money to its asset purchase program than the BoJ, which favors the yen," said Zhou, part of a group that manages $30 billion in assets. "We like the yen a little less right now because of inflation expectations."