(Bloomberg) -- For currency traders betting on the yen rally, Jefferies LLC has a warning: Don’t get carried away.

The Japanese currency has advanced more than 6% against the dollar from its November low, but if history is any guide, positioning indicates that the run is near its end, according to Brad Bechtel, the global head of foreign exchange at Jefferies. That’s because when institutional investors turned bullish on the yen over the past year, it soon went into retreat.

Market views on the currency are diverging just as doubts are mounting whether the Bank of Japan will abandon its negative-rate policy, with the Federal Reserve seen starting to cut the policy rate in the first quarter. The yen weakened on Wednesday after a summary of opinions from the BOJ’s December meeting suggested the authority is in no hurry to reduce stimulus.

“This is a market that is trying to believe in the yen long as a position that makes sense for 2024 on the hope for Fed rate cuts and a BOJ rate hiking cycle,” Bechtel wrote in a research note.

Asset managers turned bullish on the yen for the first time in seven months, according to the latest data from the Commodity Futures Trading Commission as of Dec. 19. When asset managers went yen long from mid-January to late February, the currency weakened 2% against the dollar. The yen also depreciated 0.2% when these investors held bullish wagers between March and May.

Investors’ long position “does not mean the yen rally will sustain,” Bechtel wrote. “If anything it may signal that we are getting close to completion just like we saw in January and March of this year.”

The yen lost 8% against the US dollar this year, making it the worst performer among its Group-of-10 peers.

(Adds BOJ’s summary of opinions in third paragraph and recasts chart.)

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