Investors are focused on the euro with the ECB expected to raise interest rates Thursday, but the Japanese yen has fallen sharply against the dollar after spiking in the immediate aftermath of the earthquake.

The yen on Wednesday fell to a level not seen since late September, representing a 12% pullback since mid-March, The Wall Street Journal reports.

The retreat has hurt yen-based exchange traded funds (ETFs) such as CurrencyShares Japanese Yen Trust (NYSEArca: FXY). [Japanese Yen ETFs Fall Below 200-Day Average.]

The yen has weakened against the euro and high-yielding currencies, WSJ reported. [Euro ETFs Hit High Before ECB Rate Decision.]

The move reflects speculation that the Bank of Japan will loosen monetary policy even more to speed the recovery after the earthquake and tsunami, as well as a revival of the so-called carry trade, the newspaper said.