USD/JPY: Yen Seeks Direction Against Greenback After Trump Unveils ‘Massive’ Deal with Japan

Japanese currency initially sold off on the new tariff rate but then pared back its losses as a weaker dollar broadly weighed on the exchange rate.

💱 Dollar Floats Near Near ¥147

• The USDJPY pair traded near ¥147.00 on Wednesday, as forex bros digested the last-minute surprise and “massive” US-Japan trade deal announced by President Trump. The yen initially dipped on news of fresh tariffs but clawed back losses as broad dollar weakness kicked in.
• The agreement imposes a 15% tariff on Japanese imports into the US — higher than the previous 10% but lower than the 25% Trump had threatened just weeks ago. The headline may have been bold, but markets viewed the compromise as mildly de-escalatory.
• Now that this is done, currency traders are watching for clarity: Will this deal stabilize US-Japan relations or simply spark new volatility down the road?

🚗 Trade Wins and Tariff Math

• Trump took to Truth Social with characteristic flair, calling the agreement “perhaps the largest Deal ever made.” Key sticking points — cars, trucks, rice, and agriculture — were resolved in principle, with Japan agreeing to open its market more fully to US goods.
• In exchange, auto tariffs were locked in at 15%, from the prior 25%, with no quotas on Japanese car imports. That’s a win for Tokyo, and a sign that both sides prioritized optics over escalation.
• Still, this isn’t tariff-free trade — it’s a managed truce, and forex markets are weighing whether it’s good enough to keep a lid on yen volatility.

📊 FX Traders Eye Dollar Drift

• The dollar softened broadly on Wednesday, giving the yen room to rebound. With the Federal Reserve poised to meet next week and markets pricing in another interest rate hold, rate differentials may no longer be enough to keep dollar-yen well-bid.
• Meanwhile, Japan remains committed to ultra-easy monetary policy, with the Bank of Japan showing little urgency to hike — a key reason the yen has remained under pressure for much of 2025.
• Bottom line: the volatile pair remains rangebound, stuck between trade relief and policy divergence. But with central banks and geopolitics both in play, don’t expect it to stay calm for long.