USD/JPY trims gains and retreats to 146.60 after the US Japan trade deal

• The US Dollar drifts lower against the Yen as the US-Japan trade deal boosted risk appetite.
• Japanese PM Ishiba has denied reports suggesting that he is planning to quit in August.
• BoJ Deputy Governor Uchida cast doubts about near-term rate hikes amid persistent trade uncertainty.

The US Dollar-Yen recovery from 146.25 lows on Tuesday has been short-lived, as the pair was capped at 14715 before giving away previous gains. The Greenback has drifted to the 146.60 area following the announcement of a US-Japan trade deal

From a broader perspective, the pair is hesitating near two-week lows following 
A nearly 1% depreciation over the previous two days, with both currencies on the back foot, as the US-Japan trade deal, announced earlier on Wednesday, boosted investors' appetite for risk.

The US-Japan trade deal is supporting the Yen

Trump announced a "massive trade agreement" with Japan on his Truth Social network, which lowers tariffs on Japanese products to 15% from the 25% levy announced earlier in July, while Japan is expected to invest $550 billion in the US.

Somewhat later, Japan's Prime Minister Shigeru Ishiba denied rumours from local media suggesting that he would resign in August as a result of the defeat in last weekend's parliamentary elections, which has eased concerns about political uncertainty and provided additional support to the Yen.

On the other hand, BoJ Deputy Governor, Uchida reiterated the bank's cautious stance on interest rates, citing the persistent uncertainty over the impact of US tariffs on economic growth, which casts doubts about the timing of the next rate hike and hampers a stronger Yen recovery.

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