The USD/JPY is the second most traded pair in the Forex Market, accounting for 14% of all Forex Spot transactions (according to the 2010 Triennial Survey). Together, the USD (US Dollar) and the JPY (Japanese Yen) account for over 30% of world Gross Domestic Product, for a significant portion of international trade in goods and services and for a major portion of international investment. The USD/JPY is affected largely by factors that influence the value of the U.S. Dollar and the Japanese Yen, both in relation to each other, and to other currencies. The Japanese Yen also serves as a hub for the general direction of other Asian currencies. Economic conditions in the United States and Japan tend to have a significant impact on the rest of the world.
This pair is notorious for sideways movements followed by a major move. During the Asian trading session and early morning in Europe, this pair will receive an increase in trading volume.
The Japanese Yen is often used in carry trades as investors tend to sell the Japanese Yen due to its low yield and buy other high yielding currencies.
The Japanese Yen is the third most traded currency in the world, accounting for 17% of all foreign exchange trading.
Japan is a major foreign source of financing of the U.S. national debt.
USD/JPY Trading Features
The USD/JPY is classed as a highly volatile pair and can experience short term spikes between the 20-40 pip range.
Other JPY crosses, such as the EUR/JPY and the GBP/JPY can have an influence on the price movements of the USD/JPY.
The USD/JPY pair is extremely popular and the spread is usually relatively low and competitive.