Core Viewpoint - Global investors are gradually ending their bets on the significant appreciation of the Japanese yen due to the cautious stance of the Bank of Japan, ongoing trade wars, and the high cost of holding yen positions, making this year's popular trade less profitable [1] Group 1: Economic Factors - The Bank of Japan has indicated that it will not raise interest rates this year until it fully understands the impact of U.S. President Trump's large-scale tariff measures [1] - The significant interest rate gap between Japan and the U.S. has historically made the yen sensitive to overseas interest rate changes, leading to a decline in the yen's value [2] - Investors are currently holding a net long position in yen valued at $11.41 billion, significantly down from the record level of $15.7 billion at the end of April [1] Group 2: Market Sentiment - Analysts believe that while there are long-term positive factors for the yen, short-term uncertainties and volatility need to be managed carefully [1][5] - The cost of holding yen-denominated bonds, which have an average yield of only 0.5%, is becoming too high for investors, especially if the yen depreciates [2] - There is increased interest in low-cost yen options that can yield significant returns during substantial yen appreciation [6] Group 3: Trade Relations - The yen's performance is heavily dependent on the outcome of U.S.-Japan trade negotiations, particularly in light of Trump's skepticism regarding a potential agreement [9] - Proposed high tariffs on Japanese imports could severely impact Japan's major automotive exports and complicate the Bank of Japan's efforts to move away from ultra-low interest rates [9]