USD/JPY Pulls Back to 146.60 After Initial Gains on US-Japan Trade Deal

USD/JPY Drops to 146.60 After US-Japan Trade Deal

The USD/JPY pair gave up early gains on Wednesday, falling back to 146.60 after briefly testing resistance at 147.15. Market sentiment shifted in favor of the Japanese Yen, which strengthened on the back of:

• Improved global risk appetite following the US-Japan trade agreement.
• Japanese Prime Minister Ishiba denying speculation of a resignation in August.
• Bank of Japan Deputy Governor Uchida signaling no immediate rate hikes amid ongoing trade uncertainties.

Market Recap

The pair had initially rebounded from Tuesday’s low of 146.25, but the rally was short-lived. The Greenback's weakness reflects both a soft risk-off positioning and growing confidence in broader global trade developments.

Key Drivers

US-Japan Trade Agreement

• Investors welcomed a 15% tariff deal instead of the previously feared 25%+ on Japanese goods.
• Boost in sentiment weighed on safe-haven demand for USD.

Ishiba Denies Resignation Rumors

• PM Shigeru Ishiba addressed media on Wednesday, denying reports of an August resignation.
• This political stability helped strengthen the Yen.

BoJ Policy Commentary

• Deputy Governor Uchida of the BoJ expressed caution about raising interest rates in the near term due to global trade fragility.

Outlook

USD/JPY remains under pressure near two-week lows, declining just under 1% over the past two sessions. Traders are eyeing further developments in:

• US economic data (housing, PMI)
• BoJ policy direction
• Any further comments from Japanese leadership on political transitions

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