Trading USD/JPY

The major currency pair, USD/JPY, is widely traded around the world. Owing to its high liquidity and low spreads, the pair is an attractive proposition for both novices and more experienced traders. This review explores the history of the forex pair in addition to the risks and advantages. We also look at how you can start trading USD/JPY with investing tips, strategies, charts and signals.

USD/JPY Trading Brokers

  1. XTB

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    XTB provides access to 70+ currency pairs with low spreads averaging around 1 pip on majors. The xStation platform offers an intuitive environment for forex traders with an excellent charting package encompassing 30+ indicators, plus a range of order types, catering to various strategies and risk management techniques.

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    Eightcap offers 50+ currency pairs in line with the industry average but trailing category leaders like CMC Markets with its 300+ currency pairs. However, Eightcap stands out with institutional-level spreads from 0.0 pips on major pairs like the EUR/USD, alongside low $3.50/side commissions. The broker also offers rich forex data to inform trading decisions, including key fundamentals, bullish/bearish indicators and a calendar that tracks key events in the foreign exchange market.

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    FXCC's key selling point is its forex trading conditions. ECN spreads come in as low as 0.0 pips during peak trading hours, while it supports a wider range of currency pairs than the majority of rivals with over 70 forex assets. Additionally, you have access to MT4, which was built specifically for forex trading and excels for its charting tools.

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    Vantage offers 55+ currency pairs - above the industry average, so experienced traders can explore plenty of opportunities. Vantage's deep liquidity pool provides forex spreads from 0.0 pips in the ECN account, lower than many alternatives. There are also no commissions, deposit fees or hidden charges.

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    IC Markets maintains its commitment to providing exceptionally tight 0.0-pip forex spreads on major currency pairs such as EUR/USD. This makes it an excellent option if you are seeking superior execution, with an average of 35 milliseconds. Additionally, if you are a high-volume trader, you can benefit from rebates of up to $2.50 per forex lot.

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    AvaTrade offers 50+ currency pairs with competitive spreads from 0.9 pips and zero commissions. You can trade majors, minors and exotics around the clock on industry-leading platforms, including MT4 and MT5. Traders can also access beginner-friendly trading tools and comprehensive forex education.

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    FOREX.com continues to uphold its stature as a premier FX broker, offering over 80 currency pairs and boasting some of the most competitive fees in the industry. With EUR/USD spreads dipping as low as 0.0 and $5 commission per $100k, it stands out. Moreover, its SMART Signals help to identify price behaviors across numerous major currency markets.

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    Pepperstone offers ultra-competitive forex spreads averaging 0.12 pips on EUR/USD in the Razor account, accompanied by a diverse portfolio comprising 100+ currency pairs - an extensive selection surpassing most competitors. Additionally, Pepperstone distinguishes itself by offering three currency indices (USDX, EURX, JPYX), not commonly found among alternative platforms. Pepperstone has now won our annual 'Best Forex Broker' award twice.

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    IBKR presents an extensive range of over 100 major, minor, and exotic forex pairs, surpassing the offerings of nearly all leading alternatives, though not CMC Markets. Forex trading occurs over multiple platforms and boasts institutional-grade spreads starting from 0.1 pips and 20 complex order types, including brackets, scale, and one-cancels-all (OCA) orders.

  10. XM

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    XM offers ultra low spreads across a wide range of forex assets with no re-quotes or hidden charges. Over 50 currency pairs are available, which is above the market average and is in line with one of our top award-winners, AvaTrade.

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    PrimeXBT offers 50 forex pairs, which is above the industry average and covers a good range of majors, minors and exotics. Traders can enjoy trading via margin with zero commissions. Additionally, the broker’s copy trading service allows you to explore various currency trading strategies.

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    OANDA offers 68 currency pairs, which is above the industry average. You can speculate on majors, minors and exotics, with spreads from 0.8 pips on popular pairs. There are no commissions and leverage is available up to 1:200. Average execution speeds are fast based on tests, at 12 milliseconds.

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    IG offers an above-average suite of 80+ currency pairs on its proprietary web platform, mobile app or MetaTrader 4, with more advanced charts and forex analysis tools available on the ProRealTime software. Forex spreads are competitive based on tests, starting from 0.1 pips on majors like the EUR/USD.

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    FxPro offers 70+ currency pairs with ultra-fast execution speeds and tight spreads from 0.46 pips on EUR/USD. The range of forex assets outranks many rivals, including our award winner, AvaTrade. Various short-term forex strategies are permitted, including EA trading and hedging.

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    Plus500 provides forex trading through CFDs, featuring narrow spreads across an impressive selection of over 60 currency pairs. During testing, spreads came in as tight as 0.6 pips on the EUR/USD, which is notably lower than many alternatives.

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    Markets.com offers 43 major, minor and exotic currency pairs. The range is around the industry average, though spreads are fairly competitive, starting from 0.6 pips for EUR/USD. There’s also an excellent range of tools and education, including forex calculators and trading videos.

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    NinjaTraders supports the trading of popular currencies including the EUR/USD. The software also offers advanced features to streamline the trading experience, including complex order types like market if touched (MIT) and one cancels other (OCO).

  18. Axi

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    Axi continues to offer a strong selection of 70+ currency pairs - more than many top brokers including award-winner AvaTrade, with only 50+. There are no restrictions on trading strategies including algo trading and scalping, which will serve both short-term and long-term traders.

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    Trade 35 major, minor and exotic forex pairs through CFDs with floating spreads from 0.1 pips. Alternatively, binary options allow you to speculate on rising and falling prices with a fixed stake and payout.

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    An above-average selection of 55 currencies are available with reasonable spreads averaging 0.9 pips on EUR/USD during peak hours. Aspiring traders can continuously hone their forex strategies by switching between demo mode and their live account any time, with full access to the broker's 100+ technical indicators.

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    Focus Option offers 22 forex pairs tradeable via binary options, including a selection of majors and minors. FX pairs are also available to trade with margin on Focus Option's mobile app, which offers high leverage up to 1:50 and spreads from 1 pip.

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    DNA Markets continues to deliver an excellent environment for forex traders with 50+ currency pairs and low spreads from 0.0 pips on the EUR/USD during tests. The MetaTrader 4 platform, available on desktop, web and mobile, was also designed specifically for forex trading.

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    OspreyFX offers more than 50 major, minor and exotic currency pairs. Spreads start from just 0.1 pips on the EUR/USD and the broker provides a suite of forex trading education for beginners, including partnering with Forex Squad.

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    CloseOption offers binaries on 25+ forex pairs, including majors like EUR/USD and a few minors like AUD/JPY. Payouts vary by currency, with decent typical payouts of 75% for GBP/USD.

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    Trade 70+ major, minor and exotic forex pair CFDs with up to 1:1000 leverage, no commission fees and competitive spreads from 0.8 pips. FX trades can also be executed via the reliable and fast MetaTrader 5 software.

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    Errante traders can access 50+ forex pairs with leverage up to 1:500 (location dependant). The broker offers fast execution and tight spreads, especially to clients with VIP and Tailor-Made accounts.

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    Kwakol Markets offers a wider range of forex pairs than most competitors, with 90+ assets available. Users get fast execution speeds and competitive spreads through the ECN model. On the negative side, not all currency pairs are available on MT4.

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    Trade 70 major, minor and exotic forex pairs with ultra-low ECN spreads and fast execution via the MT4 or MT5 platforms. There are also zero SL/TP limits and automated forex trading is well catered for.

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    Ingot Brokers offers forex trading on a modest suite of 30+ currency pairs with raw spreads on the MT5 platform. There are also no restrictions on short-term trading strategies, including hedging, scalping and the use of Expert Advisors (EAs).

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    Trade a small selection of 25 major and minor pairs. Spreads from zero on the pro account, micro-lot trading, and very high leverage make up for the limited range of currencies. The MetaTrader software is also a well-regarded platform for forex trading.

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    Axofa offers a decent range of 50+ forex pairs with raw spreads from 0.0 pips. Very high leverage up to 1:1000 and commission-free forex trading is available. With that said, the broker is not particularly transparent when it comes to account conditions and fees.

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    Go long or short on over 50 currency pairs with spreads from 0.6 pips on EUR/USD. Traders can access market-leading forex tools in the MT4 platform, including customisable forex charts and algorithmic trading.

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    World Forex offers CFD and digital contract trading on 53 forex pairs, including EUR/USD and GBP/EUR. High leverage is available for CFDs, which can be accessed with competitive spreads on certain account types.

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    FinPros offers 80+ forex pairs, which is one of the more diverse offerings available. Traders benefit from ultra-low latency, MT5 support and very tight spreads and low commissions on the RAW+ account.

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    Trade 45+ major, minor and exotic pairs with deep liquidity and low latency. The ultra-tight spreads from 0.01 pips on raw accounts, competitive $7 or lower round-turn commissions and high leverage up to 1:500 will suit scalpers, who can trade without limits.

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    IQCent traders can access CFDs or binary options on 45+ forex pairs. CFD spreads start from 0.3 pips and binary options payouts are decent up to 95%. This is competitive compared to Pocket Option, for example, offering forex payouts up to only 81%.

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    Trade 50+ forex pairs including popular majors and minors with very high leverage available up to 1:1000. Gold, silver, palladium and platinum pairs with USD are also available.

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    Trade 25+ major and minor currency pairs with access to over 30 technical indicators in the broker's proprietary terminal. You can also follow and replicate other forex trades using the integrated copy trader.

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    Scope Markets offers 40+ major, minor and exotic currency pairs. Although the range is average, experienced traders can access very high leverage up to 1:2000. Additionally, the broker’s proprietary terminal delivers advanced analysis tools, including a live forex heatmap.

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    Trade 50+ forex pairs, including popular major, minor and exotic pairs. This is a decent selection, but traders will have a choice between the attractive MT4, MT5 or IRESS platforms and regulatory cover from ASIC. The VPS will also suit automated forex trading strategis.

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    Anzo Capital offers 45+ forex pairs including majors, minors and exotics with fast execution and spreads starting from zero. High leverage up to 1:1000 is available with a margin call at 80% and a stop out level at 50%.

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    I think the range of 60+ major, minor and exotic currency pairs is fairly competitive, especially with spreads from 0 pips in the Pro account. Experienced traders can also access high leverage up to 1:500 in the popular MT4 platform.

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    Rock Global clients can access 50+ currency pairs via CFDs with leverage up to 1:500, world class liquidity and fast execution on the MT4 or TWS platforms. The tight spreads from 0.9 with no commission are a particularly attractive feature.

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    VT Markets offers an average selection of 40+ forex pairs with up to 1:500 leverage. Forex spreads in the ECN account are highly competitive, starting from 0.0 pips, although the 1.2-pip minimum quotes in the Standard account are a little higher than the likes of Pepperstone or IC Markets.

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    Binary and OTC options can be purchased on 40+ currency pairs, with 55+ currency pairs available if you deposit $1000. Typical payouts are reasonable at 81% and the $1 minimum trade makes the broker accessible to new forex traders. There is also access to the MT4 and MT5 platforms for experienced forex traders.

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    Exinity offers 150+ forex pairs to trade on a very competitive ECN pricing model, with spreads from zero and low commissions of $4 per round turn. Traders can access the powerful MT4 and MT5 platforms and trade with no restrictions on popular trading strategies.

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    ForexChief supports spot foreign exchange trading on all account types for 40+ major, minor and exotic currency pairs. Trading takes place on the leading MT4 and MT5 platforms, which offer dozens of in-built technical tools for short-term forex strategies.

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    PU Prime clients can trade 40+ forex pairs via the MT4 and MT5 platforms with dynamic leverage up to 1:500. Spreads start from near zero on Prime accounts, which also charge a $7 commission per lot, and a zero-commission Standard account with wider spreads is also available.

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    With 100+ currency pairs including all majors plus many minors and exotics tradeable on the MT4 platform with 1:2000 leverage, SuperForex lives up to its name as a great choice for forex traders. The ForexCopy system is also useful for newer traders.

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    AdroFx's strongest offering is its 60+ currency pairs, which can be traded with very high leverage up to 1:500. The broker also offers competitive forex spreads starting from 0.4 pips and charges no commission. Additionally, traders have access to MetaTrader 4, which was built for forex trading and offers excellent support for technical analysis and algo trading.

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    Start trading on dozens of currencies at RoboMarkets with powerful analysis tools and pattern recognition technology. 35+ currency pairs are available with tight spreads from 0 pips and rapid market execution. You can also utilise the broker's forex news alerts and economic calendar.

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    Trade 7 major, 21 minor and 29 exotic forex pairs with high leverage and a choice between STP or ECN accounts. Support is available around the clock and the TradeLocker forex software is provided.

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    M4Markets offers 45+ currencies with zero pip spreads. The low latency and 30-millisecond execution speeds makes the broker a decent choice for forex traders. Additionally, there are no restrictions on trading strategies, including scalping.

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    MultiBank FX offers trading on 50+ major, minor and exotic currency pairs. Spreads are tighter than many competitors and the broker offers higher leverage than most alternatives. Automated trading strategies are also permitted.

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    I’m happy with Tradeview’s strong range of 60+ currency pairs spanning majors, minors and exotics with competitive spreads from 0 pips in the $1000 ILC account. Traders can choose from several platforms, but I was particularly impressed with the feature-rich Currenex platform which is designed specifically for currency trading.

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    Global Prime traders can access 48 forex pairs including majors, minors and exotics with tight spreads from 0.9 with no commission or from 0 with a $7 round turn. Forex is traded via the leading MT4 platform, micro lots are available and latency is low via a New York-based server.

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    Trade Nation offers over 30 of the most popular forex pairs with variable spreads. Traders can access a slick proprietary platform or MetaTrader 4, with real-time forex market updates and insights via 'Smart News'.

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    As well as a competitive selection of 55+ forex pairs, traders can access high leverage up to 1:300. You can also enjoy advanced analysis from Trading Central with easy integration into MetaTrader 4.

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    Traders can access a decent range of 60+ major, minor and exotic forex pairs through standard and ECN accounts with tight spreads from 0.5 and 0.0, respectively. Execution speeds are also faster than most competitors at 50ms, which will appeal to active forex traders.

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    4xCube offers 60+ currency pairs with competitive trading conditions. We like that all trading strategies are permitted including scalping and hedging.

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    ActivTrades is a great broker for active forex traders with industry-low spreads from 0.5 pips and zero commissions. The forex broker also offers impressive execution quality and speeds, alongside award-winning customer service.

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    BlackBull offers 64 forex pairs with very competitive pricing through its ECN accounts, with the standard commission-free spread starting from 0.8 and spreads with commission starting from zero. The broker supports diverse trading platforms including MT4 and MT5, and provides leverage up to 1:500.

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    RoboForex offers trading on 30+ currency pairs, trailing category leaders like Pepperstone with its 90+ forex assets. That said, the Prime and ECN accounts feature competitive average spreads of 0.1 pips on the EUR/USD. Additionally, with a minimum investment of $100, traders can utilize the CopyFX system to replicate the strategies of seasoned currency traders.

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    Swissquote offers trading on a huge range of forex assets, covering 80+ currency pairs. Spreads start from 1.3 pips with the Premium account and there are zero commissions. Micro, mini and standard lot sizes are available plus options contracts on major currencies.

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    SimpleFX provides a comprehensive selection of around 60 currency pairs, from majors like GBP/USD to exotics like CHF/PLN. Forex trading fees are competitive, averaging 0.9 pips on EUR/USD during testing, while MetaTrader 4, available on desktop, web and mobile, was built specifically for trading currencies online.

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    You can go long or short on over 50 forex pairs from majors to exotics, with competitive spreads as low as 0.1 pips. The broker offers the leading charting software, MetaTrader 4, which delivers a host of advanced features, including 9 timeframes and over 30 indicators.

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    FXDD continues to offer a leading selection of 90+ currency pairs with ECN pricing. Spreads are decent, coming in at 0.4 pips for EUR/USD during testing. That said, these quotes aren’t as narrow as top competitors like Pepperstone.

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    Trade on 45+ majors, minors, crosses and exotics, with competitive pricing, ultra-fast execution and no requotes. Newer traders can access zero-commission trading. Experienced forex traders can operate with no trading restrictions and benefit from an ECN account and a VPS service.

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    FXTrading clients can access 70+ forex pairs with high leverage up to 1:500, fast execution averaging 80ms, excellent liquidity and spreads from zero. A good selection of minors and exotics are available as well as all the majors. New users can start trading forex in 4 easy steps.

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    With over 190 forex spot pairs, EZ Invest outperforms many rivals in terms of access to the currency markets. Users can also choose between desktop software, a webtrader plus a solid mobile app. On the negative side, spreads aren't the tightest on entry accounts.

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    Trade 50+ forex pairs via the MetaTrader 4 and MetaTrader 5 platforms with leverage up to 1:500, immediate execution, deep liquidity and tight spreads.

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    Fortrade offers 60+ currency pairs including a good selection of majors, minors and exotics. Trading takes place via MT4 or Fortrade's proprietary, low-latency terminal, and spreads on the USD/GBP pair average a reasonable 2 pips.

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    FP Markets stands out as an excellent option for forex traders, boasting a selection of over 70 currency pairs covering a wide range of currencies, especially since expanding its choice of exotics. With average spreads of just 0.1 on the EUR/USD in its Raw account, the broker provides competitive pricing for traders.

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    IronFX continues to offer a strong selection of 80 currency pairs. You can trade through the market-leading MT4 platform with a range of forex market research tools. That said, commission charges in the zero-spread accounts are high, starting from $13.50 per lot.

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    Trade 80+ major, minor and exotic forex pairs. This is a very competitive range of currency pairs with 50+ exotics to choose from, and traders will benefit from fast execution and support from extra features including a pip calculator. The MetaTrader 4 software was also designed for online forex trading.

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    Libertex offers CFD trading on 50+ forex pairs, offering long and short opportunities. Its strength comes in its tight spreads – we were offered 0.2 pips for EUR/USD.

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    NordFX offers a modest range of 33 major and minor forex pairs. Disappointingly, there are no exotic pairs, though traders do benefit from tight spreads from 0.0 pips and low commissions from 0.0035% per side.

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    HYCM offers 40+ forex pairs, with most available to trade on either the MT4 or MT5 platform. The maximum leverage on offer is 1:30 in accordance with regulations, and tight spreads start from 0.2 on the Raw account and from 1.2 on the commission-free Classic account.

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    FXOpen clients can trade 50+ forex pairs (28 on micro accounts) with leverage up to 1:30. Fees are competitive with spreads starting from zero with a small commission on ECN accounts, and slightly wider spreads and no commission on STP accounts.

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    Trade 45 major, minor and exotic forex pairs. This is an average range, but the broker offers attractive and very competitive tight floating spreads from 0.3. Useful features including a news feed set the broker apart from many rivals and can help plan forex strategies.

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    Hantec Markets offers a limited range of 30+ forex pairs – less than most top brands, including Pepperstone with 100+. That said, market execution is rapid based on tests, and spreads are competitive starting at just 0.2 pips. This, combined with access to the popular MT4 platform with 30+ technical indicators, ensures a relatively complete trading experience for short-term currency traders.

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    With 60+ currency pairs available, Dukascopy offers enough majors, minors and exotics to keep most forex traders happy. The broker also offers high leverage up to 1:100 – a good amount to see from a reputable and regulated broker. Currency traders have access to excellent software, including MT4 and JForex.

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    Speculate on popular currency pairs with flexible leverage up to 1:500 and zero-pip spreads in the GO Plus account. Commission-free trading is available with micro, mini and standard forex contract sizes.

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    Tier 1 liquidity on an impressive range of 189 currency pairs and spot metals, plus 130 forwards, from 0.4 pips.

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    Trade on 60+ forex pairs with no commission and competitively tight spreads from 0.6 on major pairs such as EUR/USD. This is a good selection of forex pairs and excellent pricing for commission-free trading, well below the industry average.

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    Trade a wide selection of 80+ currency pairs with spreads from 0.5 pips and industry-favorite platforms. City Index has 40+ years experience in forex trading with liquidity from tier-one banks.

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    ThinkMarkets offers 46 currency pairs, which is around the industry average. Forex traders can benefit from tight 0.0-pip spreads for EUR/USD during peak market hours. Additionally, the ThinkTrader proprietary platform offers an impressive 125+ technical indicators - ideal for complex forex strategies.

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    CMC presents an extensive array of 300+ forex pairs characterized by tight spreads and rapid executions, surpassing the offerings of many competitors in terms of currency diversity. Forex indices also present a fairly unique and holistic way to speculate on the value of key currencies like the USD, EUR and GBP.

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    FXTM offers a strong range of 60+ currency pairs - more than many competitors including AvaTrade. There’s also 6 currency indices for traders looking to diversify their forex portfolios. The brand’s ECN account offers competitively low spreads from 0 pips, with equally low commissions up to $2 per lot.

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    Trade FX pairs with tight spreads & leverage.

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    easyMarkets continues to offer 60+ forex pairs including majors, minors and a selection of exotics, with fixed spreads from 1.8 pips or variable spreads from 0.8 pips. FX traders can access advanced trading software in MetaTrader, as well as very high leverage up to 1:2000.

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    Fusion Markets offers an excellent selection of 90+ currency pairs, providing a range of short-term trading opportunities. It continues to excel for its ultra-tight spreads from 0.0 pips and exceptionally low commissions of $2.25 per side. You also get access to leading forex software in MetaTrader 4.

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    Trade 24 forex pairs via binary options. Such a small range of currency pairs is not that unusual among binary options brokers, and BinaryCent's high payouts up to 95% compensate for the lack of range.

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    Trade 49 major, minor and exotic currency pairs with fixed spreads or ECN pricing with no dealing desk intervention and a low starting deposit. You can analyze the currency markets using the broker's in-house trading platform.

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    FXCM offers an average range of 40+ currency pairs, although there are no commissions and spreads are competitive from 0.78 pips for EUR/USD. The broker also offers 3 forex baskets covering USD, Yen and emerging markets benchmarks.

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    InstaForex's range of 100+ currency pairs is among the largest we have seen. ECN spreads are also available from 0.0 pips with zero commissions. Minimum deposits start from $1 making the broker accessible for beginners. You can also access market-leading forex analysis and insights.

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    Trade 200 CFD forex pairs with DMA pricing and tight spreads, ultra low latency and high leverage up to 1:1000. The range of forex pairs available and pricing model are among the most attractive in the African market.

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    Capital.com offer a long list of forex CFD pairs for trading. All have competitive spreads. The firm also ensures negative balance protection

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    Trade over 180 major, minor, and exotic forex pairs on the Trading 212 platform, featuring floating spreads and leverage up to 1:30. It’s important to note, though, that the forex broker has a history of adjusting margin requirements without providing adequate notice. As a result, CMC Markets is a better pick for forex traders with more currency pairs and a cleaner record.

USD Vs JPY Explained

The USD/JPY represents the exchange rate between the US Dollar and the Japanese Yen. The US Dollar is the base currency in the pair and the Yen, the quote currency. The figure quoted is how many Yen you need to buy a US Dollar. Generally speaking, when the Japanese economy is growing, the Yen rises against the Dollar. The reverse is also true.

The USD/JPY is a high volume, volatile pair. It is responsible for 17.7% of the daily forex turnover at a value of $900 billion. After the USD/EUR, it is the second most traded currency pair in the world.

Whilst the strength of the US Dollar’s position is more widely known, the Japanese Yen also commands a high market value. Since its introduction in 1871, the Yen has flourished. Today, it is Asia’s most liquid currency and the third most traded currency in the world, after the US Dollar and Euro. However, the pair’s relationship has seen significant fluctuations over its recent history, an understanding of which will help traders make more accurate forecasts for the future.

Pros Of Trading USD/JPY

There are several reasons why trading the USD/JPY is popular:

  • Volatility – USD/JPY can be a volatile pair with movement fuelled by Asian market forces. High volatility presents an opportunity to generate large profits but it does so at a risk.
  • Liquidity – The volume of trades conducted on the USD/JPY pair is vast, owing to the fact that it’s made up of two of the most widely traded currencies in the world. High volume increases its relative safety given that trading tops, signals and charts are widely accessible. Large sums can also be moved in and out of currencies whilst benefitting from narrow spreads.
  • Costs – Consistent with other major FX pairs, the USD/JPY sees relatively low bid-ask spreads. With fewer costs transferred to the trader, greater profits can be achieved.
  • Resource availability – There is a broad range of information on the currency pair for traders to draw from. Realtime charts, live daily average ranges, exchange rate history graphs and more can be used to help guide strategy and execution. There is also an active online trading community with popular blogs and forums. Discussions cover historical bar charts, monthly forecasts and economic calendars, to breaking market news, profit calculators, trading hours and prices.
  • Predictability – The USD/JPY is closely linked to the commodities market in Japan meaning that conducting research and analysis can be relatively straightforward. Global imports and exports are a good indication of market sentiment. The relative predictability of movement means that the pair makes for a suitable option for both experienced traders and beginners.
  • Trading vehicles – Given the interest in USD/JPY, there are many trading vehicles available to leverage. From E-mini USD/JPY to futures and options, ETFs and many more, it has never been easier for traders to speculate on the pice of the major FX pair. Whether it be Elliott Wave analysis or daily pivot points, for traders today there are many technical analysis tools at your fingertips.

Risks Of Trading USD/JPY

As with any forex instrument, there are risks to consider before trading USD/JPY:

  • Competition – As technology, including trading algorithms, signals and forecasts become increasingly advanced, traders today need to do more than basic market analysis to generate profits. These algorithms generate accurate forecasts using online charts, forward rates and market data. Retaining a competitive edge is becoming increasingly challenging.
  • Volatility – Whilst volatility has its benefits, it also carries risk. In volatile markets, winning positions and options can be lost quickly. As a result of the implied volatility, traders should always action tight risk management strategies to mitigate losses.
  • Political intervention – The BoJ has been known to intervene in the forex market when movements threaten to undermine the outlook for Japanese economic growth. Traders should keep up to date with developments and expert analysis.
  • Economic instability – Economic instability in Asia can have a big impact on the USD JPY. The Yen is particularly affected, more so than its neighbouring currencies, owing to its global accessibility.
  • Leverage – Margin trading using high leverage can be an opportunity to capitalise on big returns. However, when trading volatile pairs such as the USD/JPY, it can be all too easy to see big losses.

Whilst trading USD/JPY does have its benefits, it does also carry risk. Traders should ensure they are familiar with any potential risks before investing capital.

Influences On Movement

There are a number of factors that influence the behaviour of USD/JPY:

  • Speculation – Market sentiment can heavily influence the USD/JPY exchange rate. If the value of a currency is forecast to rise, investors demand more of the currency to generate profit. The increase in demand increases the value of the currency.
  • Economic growth – Widely recognised as the most important marker, economic strength has a substantial influence on the movements of the USD/JPY. When the US economy weakens, the Yen typically rises against the Dollar. Levels of unemployment, inflation and industrial production are all key indicators of economic strength.
  • Political intervention – The US and Japanese economies are monitored by The Federal Reserve (Fed) and the Bank of Japan (BoJ) respectively. The BoJ is of particular interest as over the years, they have introduced a number of policies to help bolster the Japanese economy. Traders should ensure that they keep abreast of current Japanese news.
  • Natural disasters – Due to its geographical makeup, Japan is susceptible to powerful natural disasters which can have seismic implications on the position of the Yen. Historically, the US has a more stable climate and is less likely to suffer extreme weather disruption.
  • Currency growth – The US Dollar grows at a much faster rate than the Yen. Despite periods of high growth, the trend continues downwards against the US Dollar.
  • Currency correlation – A currency does not move independently of other currencies. A change in the USD/EUR will, in turn, affect the USD/JPY. This means that traders need to have an awareness of global forex trends and forecasts to remain competitive. An understanding of the correlation between currencies can prove beneficial.

Calculating Correlation

Currency correlations range between -1 and +1, with -1 being a negative correlation and +1, a positive correlation. Pairs that have a positive correlation move in the same direction whilst pairs that have a negative correlation move in opposite directions. This can be seen most clearly when plotted on a 5 or 10-year graph.

For example, the USD/JPY positively correlates to USD/CHF but negatively correlates to EUR/USD. All currencies pairs are linked in some way, including the GBP. The Yen vs the price of gold is also highly correlated. Despite gold not being a traditional currency, it is traded in a similar way. The higher USD/JPY moves, the further gold tends to fall.

By looking at interactive or streaming charts, current price and exchange rate history, traders can get a feel for why forex pairings behave in the way they do. Relationships between currencies can be utilised in an effective trading strategy.

Day Trading Strategy

Trading Hours

Timing is everything when trading currency. Even though forex markets are open 24/7, there are certain windows that offer the most favourable conditions. It is a matter of quality over quantity.

The USD/JPY sees consistent volume throughout the day. But, between the opening time of 12:00 and the closing time of 15:00 GMT, tends to be the best time to trade. Although Tokyo’s market does not open until later, both London and New York are in full swing. It is during this time that the market is most active, spreads are tightest and volume at an all-time high. It is recommended that traders focus their activity during this intraday window.

Preparation

Traders serious about being head and shoulders above others will emphasise the importance of preparation. Whether it is logging historical data on an exchange rate’s history in an excel spreadsheet, pouring over economic calendars or scouring blogs and forums, to fail to prepare is to prepare to fail.

Moving Average Cross & Bounce

USD/JPY is ideal for intraday trading. Spikes can often be seen within minutes of the market’s opening. To capitalise on rich price action movement, many traders opt for a simple moving average cross and bounce strategy. Its popularity in part, is that it is simple to set up and execute. Some opt for 15-minute charts, but most use a 4-hour candlestick chart. The indicators needed include MA(50/200) and BB(20).

Buy entry rules state that BB(MA20) must be above MA(50), the price needs to be above both whilst also testing BB(MA20) as support whilst above MA(50). Choose a bullish confirmation candle from support and enter a buy/long entry.

Sell entry rules state that BB(MA20) should be below MA(50) and the price has to cross below both whilst testing BB(MA20) for resistance whilst remaining below MA(50). Opt for a bearish confirmation candle from resistance and input a short/sell entry.

It is recommended that traders incorporate stop-losses when using this strategy.

USD Vs JPY News

The daily forex news, specifically economic reporting, is an important resource. Traders should ensure they remain up to date with daily news announcements. Whilst useful for all, it’s particularly important for traders that wish to avoid over-reliance on hourly, yearly, 20 or 30-year forecast charts.

Information regarding public sentiment, economic growth and the latest employment rates all inform a trading strategy. Some of the best outlets for daily updates include:

  • CNBC
  • Reuters
  • DailyFX
  • Yahoo Finance
  • Google Finance
  • Discussion forums

Given the BoJ’s tendency to influence the Yen, it is particularly important for traders to have an overview of daily forex outlooks. Announcements can explain movements in weekly and monthly charts and data in addition to the latest and historical forecasts.

Risk

When day trading on the USD/JPY, traders should aim for strong risk-reward ratios. A ratio of 1:4 is one suggestion and will help balance volatility with profit. For example, risking only 25 pips in return for 100 pip profit. Implementing the 1% rule is always good practice and this pair is no exception. By never trading more than 1% of your total portfolio on a single trade, you will help to curb losses and facilitate long-term investing success.

Whether your trading strategy focuses on key support and resistance levels or moving averages, tight risk management underpins every successful trading strategy.

USD Vs JPY Forecasts For 2024

Now, what does it all mean for the future of USD/JPY? For any broker or trader, short and long-term forecasts, outlook predictions and the latest daily news are valuable resources to guide investment decisions. Today, remaining abreast of forex news, rates and economic reports is more important than ever to gauge future movement and to spot opportunity.

Final Word On USD/JPY

In short, trading on the USD/JPY is a potentially lucrative investing option for UK traders. Low spreads paired with high volume and volatility means profit potential. However, traders should ensure they are informed about the associated risks. As always, it’s our recommendation that a careful approach to risk management should be incorporated into any trading strategy. Whether you’ve been trading on the USD/JPY for years or began trading this week, last week or yesterday even, the fundamentals remain equally important.

Find out more about forex trading.

FAQ

How Do I Trade USD/JPY?

To trade USD/JPY, traders will need to open an account with a forex broker that offers the currency pair. Setting up an account is relatively straightforward. Once sign up is complete you just need to deposit funds and then you can begin buying and selling currency.

What Is A Good Day Trading USD/JPY Strategy?

Risk management should form the basis of any investing strategy. From there, traders may choose to try breakout strategies or leverage moving averages using technical analysis. Risk appetite, expectations, personal targets and the size of investments will also play a role.

What Does It Mean To Trade USD/JPY?

Trading the USD/JPY is to buy and sell the currency pair. There are times when this will be more and less profitable. To generate the greatest profits investors typically trade during high volume periods when spreads are at their narrowest.

Can I Use A Scalping Strategy To Trade USD/JPY?

It will depend on the broker. Before setting up an account, contact their customer support team to see if they permit scalping strategies. With that said, many top FX brokers accept scalping techniques.

When Will USD/JPY Go Up Or Down?

Technical analysis, market data, charts and trends help to form increasingly accurate forecasts and projections. However, there is always an element of the unknown so it is impossible to predict exactly when the Yen will be going up or down vs the Dollar.