USD/JPY Steady Amid Japan-US Trade Deal Announcement

The Japanese Yen was steady against the dollar after a US-Japan trade deal announcement. The deal imposes a 15% tariff on Japanese imports to the US, which is better than the previously touted 25% rate. The muted reaction reflects the damage to trade between the two countries. Stocks rallied, with the Nikkei rising around 3% overnight. USD/JPY was 0.1% higher at the time of writing.

The Japanese yen held its recent advance against the dollar on Wednesday, trading around 146.50 per dollar, following the announcement of a trade deal between the United States and Japan. The agreement, which includes a 15% tariff on Japanese exports to the U.S., was less severe than the previously anticipated 25% rate [1].

The yen's muted reaction reflects the ongoing uncertainty and potential damage to trade relations between the two countries. Despite the tariffs, stocks in Japan rallied, with the Nikkei index rising by approximately 3% overnight [2]. The USD/JPY pair was 0.1% higher at the time of writing, indicating a slight appreciation of the dollar against the yen [3].

The deal, announced by President Donald Trump, also includes Japan's commitment to invest $550 billion in the U.S. and open its markets to key American goods such as cars, trucks, rice, and certain agricultural products [3]. However, political uncertainty in Japan deepened after the ruling coalition lost its majority in the upper house elections on Sunday, which may impact the implementation and acceptance of the trade agreement [2].

The dollar remained weak on Wednesday, having lost ground overnight, as uncertainty over tariffs continued to influence the forex market [3]. The euro and sterling also showed slight movements, with the euro trading at $1.1736 and sterling at $1.35180 [3].

The trade deal between the U.S. and Japan comes ahead of an impending tariff deadline and follows months of protracted negotiations. The deal aims to reduce tariffs and promote mutual trade benefits, but the long-term impact on the Japanese economy and trade relations remains to be seen.

References:
[1] https://www.bloomberg.com/news/articles/2025-07-22/yen-jumps-then-quickly-erases-gains-after-japan-15-tariff-deal
[2] https://www.tradingview.com/news/te_news:471895:0-japanese-yen-holds-gains-after-us-trade-deal/
[3] https://www.reuters.com/world/africa/dollar-holds-losses-after-trump-announces-japan-trade-deal-2025-07-22/