Yen a compelling trade, but at a cost

Global investors are unwinding their wagers on Japan's yen rising quickly as a cautious central bank, a trade war and the prohibitive cost of holding the currency sour one of the year's most popular trades.

- ANKUR BANERJEE

Most analysts remain convinced the yen will eventually appreciate as Japan shifts away from ultra-low interest rates. But pitted against this conviction are short-term headwinds, including the lack of progress on a trade deal with the United States and uncertainty surrounding Japanese national elections.

Monetary policy has become the yen's biggest sticking point after the Bank of Japan (BoJ) has hinted it is reluctant to raise rates again this year, having done so in January, before it can gauge the full impact of US tariffs.