USD/JPY drops on US-Japan trade deal amid risk-on sentiment

USD/JPY declined 0.5% to 155.20 as markets responded positively to a newly announced trade agreement between the United States and Japan. The deal, which reduces tariffs on key industrial goods and agricultural products, boosted risk appetite and weakened the safe-haven dollar. Japanese equities rallied 1.2% following the announcement, with the Nikkei reaching new highs for the month. The yen's strength was further supported by expectations that the Bank of Japan may adjust its yield curve control policy sooner than anticipated. Technical indicators show USD/JPY breaking below the 155.50 support level, with the next target at 154.80. The 50-day moving average at 156.00 now acts as resistance. Traders should monitor upcoming US GDP data and Japanese inflation figures, which could either accelerate the pair's decline or trigger a reversal if the data surprises to the upside.