USDJPY (also shown as USD/JPY) is a currency pair: the Japanese Yen paired with the US Dollar. JPY and USD are both considered major currencies, meaning that these currencies are widely used in international trade and transactions. As a pair, USDJPY is a favorite trading instrument for millions of traders in the world.

The value of USD/JPY indicates how many Japanese Yens you need to purchase one US Dollar. For example, if USD/JPY is at 110.10, it means you need 110.10 Yens to buy 1 USD. USDJPY is the second most traded currency pair in the world, after EURUSD. As of 2021, USDJPY represents around 13.5% all daily transactions in the foreign exchange market.

In this pair, USD is the base currency while JPY is the quote currency. Notice that some currency pairs show up to 5 decimals after zero, however for USD/JPY it only goes so far as two decimals. One pip move for USDJPY is a 0.01 move in either direction. If USD/JPY moved from 130.70 to 130.71, that means a one-pip move.

As is the case with all currency pairs, whatever impacts a single currency also has an effect on its pair. Factors that are most likely to impact the price of EUR/JPY are as follows:

Role of USD:
US Dollar is the most traded currency in the world. Most other assets are paired with USD in order to gauge its value accurately. Anything that would impact the USD will automatically have an impact on any USD pair as well. FED and ECB decisions: The Federal Open Market Committee (FOMC) of the United States Federal Reserve System (FED), meets bi-monthly. The committee makes key monetary policy decisions on interest rates and money supply.

For example, higher interest rates in the US decrease the supply of USD in the market, because investors want to hold on to USD.

Employment Data: On the first Friday of every month, the US Department of Labor's Bureau of Statistics releases employment data for the previous month. The report is widely known as NFP (nonfarm payrolls) or 'US jobs report'. It is an influential statistic on the state of the labor market in America, and it has a direct influence on EURUSD value.

Geopolitical tensions: The political situation between the US and Asian countries impacts USDJPY price, even though Japan is a liberal economy and stable democracy. In times of political uncertainty, investors might shy away from a particular currency or a currency pair. They usually turn to alternatives or to ‘safe havens’ such as gold. Any economic, political, and financial development that impacts JPY would definitely impact USD/JPY as well.

Role of Japanese Yen:
Japan’s economy has multiple factors in play that impact the rate of JPY currency. As usual, the general health and stability of an economy plays the largest part. As a largely stable and industrious country, Japan’s commerce and technology industries shift the balance either in favor of the prices or against them.

The yen is the third most traded currency in world, behind the US dollar and the euro.

Perhaps the most unexpected factor that affects JPY is the severity and frequency of natural disasters happening in the region. Due to its size and location, Japan is vulnerable to natural disasters ranging from earthquakes, volcanoes, and tsunamis to floods. Such events can affect the currency’s value immensely, even though the country is known for its resilience against such events.

The government of Japan often uses economic initiatives to boost the economy. As a result, traders and investors pay close attention to interest rates and government interventions from financial institutions, primarily the Bank of Japan (BOJ). Another major indicator that traders watch closely is the details within data reports such as the Tankan Report, the Tokyo Area CPI and the interest rate decisions of the BOJ. As a whole, these factors determine the various financial paths that Japanese Yen might follow.

Foreign exchange market and CFD markets are too volatile and unpredictable to set a universal strategy for any product. Although the volatility is what attracts the investors, new traders often find it difficult to adjust their trading and to adapt the fast-paced nature of the markets.

That being said, we have some data that we can rely on. For example, if you are a day trader, 12:00 - 15:00 GMT is the most volatile trading period during the day. This is because London and New York are both open for the bulk of this period. Even though Tokyo market isn't open, this three-hour window typically presents the largest price moves of the day. That means greater profit potential, and spreads are also typically tightest during those hours.

Statistically, Thursdays happen to be the most active trading day for USD/JPY pair.

Besides the general advice of catching trends via support and resistance levels, one should remember that trading USD/JPY is closely linked to EUR/USD and EUR/JPY. That is why it is important to keep track of the other major pairs if you wish to trade USD/JPY.

As always, you should put protective stop-loss and adequate take-profit measures in play.

USDJPY is a popular instrument in the currency market. You can start trading USD/JPY right now with a free Blue Suisse account. Not feeling ready? You can practice trading with a demo account as well. Follow these easy steps to start trading gold:

Step 1: Register by filling out the form on Blue Suisse website here.
• If you want to try our platforms first, you can start with a demo account instead.

Step 2: Finish your application by confirming your identity. We will ask for a proof of identity and a proof of address.

Step 3: Make your first deposit via secure methods, including credit card, bank transfer or others.

Step 4: Access a trading platform. Either install the software or access TradeMaster’s web version via your browser.

Step 5: Look for USD/JPY using the search function and start trading immediately.