The Japanese yen strengthened on Wednesday, recovering earlier losses after conflicting headlines about Prime Minister Shigeru Ishiba’s political future offset optimism around a new trade pact with the U.S. The currency briefly hit 146.20 per dollar—its strongest since mid-July—before slipping on reports suggesting Ishiba may step down after his party’s poor election performance. Ishiba denied the claims, calling them “unfounded,” and the yen rebounded, with the dollar last down 0.1% at 146.44 yen.
The newly announced trade deal lowers tariffs on Japanese auto exports and averts additional levies, offering economic relief and granting the Bank of Japan more room to adjust interest rates. Analysts expect this could support further yen strength, with some targeting a move toward 145 per dollar.
The euro also weakened 0.3% to 171.82 yen. Meanwhile, the U.S. dollar rose against the Swiss franc, climbing 0.3% to 0.7941.
Elsewhere, currency markets remained quiet, with many investors cautious amid lingering trade uncertainties. While the dollar had been under pressure since the White House began imposing tariffs in April, its performance has steadied this month amid a pause in escalation and hopes for further negotiations.
