USD JPY Trading

The USD JPY is the ticker for the exchange rate of the US dollar against the yen in the Forex market.

This pair is popularly known as the Ninja, mainly because the famous heroic character comes from Japan.

USD JPY belongs to the group of major currencies in Forex trading, and is the second most liquid currency pair, behind the EUR USD.

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In the USD JPY pair, the US dollar is the base currency, while the Japanese yen is the quote currency. When, for example, the price of the USD JPY is 110, this means that one would need 110 Japanese yen to acquire 1 US dollar. USD JPY has always been popular among Forex traders, as it offers volatility everywhere, especially during “strange” Asian times, ensuring a 24-hour market.

USD JPY history

While the US dollar is currently the reserve currency of the primary world, there was a moment in the 1980s when the yen was making a serious claim for this position.

Japan’s prolonged economic decline, however, has allowed the yen to never realize its “dream,” but the currency remains very dominant in world trade and the fourth currency held by the reserves.

Japan has always been one of the world’s leading net exporters, with exports contributing 40% of its GDP.

With such export dependence, the Japanese government is renowned for intervening in the currency markets in order to control the prices of their products on international markets.

Yet, the Japanese yen has remained the most liquid currency in Asia and is often used as a proxy for all Asian economic growth.

The Japanese government’s intervention in the markets has made the Ninja a model currency pair. Historically, the pair remained in the 76-146 price range. In recent years, the range has been more between 85-130.

But the pair posted its all-time high of 306.84 in December 1985, and its historic lows of 75.74 in October 2011, during the global financial crisis.

Main factors influencing USD JPY

The main agency influencing the USD JPY is the Bank of Japan (BoJ), known for many market interventions. The Bank of Japan publishes monthly interest rates, along with rate statements that will give traders and investors an idea of ​​the future direction of the policy.

The Bureau of Statistics of Japan periodically publishes important data that can have a significant impact on the USD/JPY rate. As Japan’s economy is export-oriented, data such as the trade balance, GDP and the current account almost always stimulate much volatility from the USD to the JPY.

The US Federal Reserve will also have an impact on the USD / Yen pair, with major monetary policy decisions able to form lasting trends in the pair. The US Fed releases interest rates eight times a year.

As Japan is a nation prone to earthquakes, the Japan Meteorological Agency is an important body that can affect the prices of the USD JPY. The severe earthquake warning system (EEW) earthquake warnings can pile up pressure on the Japanese yen and consequently impact the USD JPY rate.

USD JPY Volatility

USD / JPY has always shown a high correlation with crude oil. This is logical because Japan is one of the most industrialized countries in the world and one of the largest importers of the commodity.

The Japanese yen generally falls as oil prices rise, and vice versa. Thus, the USD/JPY pair is positively correlated with oil.

The pair will generally rise as oil prices rise and fall as oil prices fall. While this correlation exists, it is essential to analyze the markets effectively before trading the USD JPY pair.

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