Nikkei Rallies on Trade Deal While JPY Remains Choppy vs Major Currencies

Asian markets saw divergent reactions to the US-Japan trade announcement, with the Nikkei 225 surging 1.2% while JPY pairs displayed erratic behavior across the board. USD/JPY fluctuated in a 40-pip range around 156.00, unable to establish clear direction despite the positive equity sentiment. EUR/JPY and GBP/JPY showed similar indecision, trading in tight ranges near 169.50 and 198.20 respectively. The trade deal's boost to Japanese exporters failed to translate into sustained yen strength, as traders remained cautious about the Bank of Japan's ultra-loose monetary policy. Market participants are weighing improved trade relations against persistent Japan-US yield differentials. Technical analysis shows JPY pairs consolidating within recent ranges, awaiting catalysts for breakout moves. The disconnect between surging Japanese equities and choppy yen price action suggests traders need more clarity on the deal's long-term implications for Japan's economic outlook and potential BoJ policy adjustments.