USD/JPY mixed as US-Japan deal boosts risk but limits yen gains

USD/JPY traded volatile around 155.40 following the US-Japan trade agreement announcement, with conflicting forces affecting the pair. While the deal initially sparked risk-on sentiment that typically weakens the yen, the agreement's provisions for increased Japanese exports to the US are expected to strengthen Japan's trade balance. The pair briefly touched 155.80 before retreating to current levels. Other risk-sensitive pairs showed clearer trends, with AUD/USD gaining 0.4% to 0.6520 and USD/ZAR falling 0.6% to 18.25. Market participants remain divided on the yen's direction, with some expecting continued weakness due to yield differentials while others anticipate BoJ policy normalization. Near-term support sits at 155.00, with resistance at 156.20. Traders should watch for follow-through in risk sentiment and any comments from Japanese officials regarding currency levels.