How to Trade USD JPY in 9 Steps: Your Ultimate USDJPY Trading Guide

With forex trading of any kind, having a solid strategy in place before you begin trading is absolutely crucial. This is especially true of USD/JPY; where even the smallest market shifts can translate to significant gains and losses. If you were to forex trade USD/JPY, you could, for example, invest in the currency pair when the value of the JPY is lower and then sell when it rises, thus making a profit from the price difference.

  • An effective trading strategy to trade foreign currencies introduces an element of discipline into the trader's work.
  • This gives 100 JPY for a mini-lot (0.81 USD) or 10JPY (0.081 USD).
  • For example, policies related to money flow, quantitative easing, inflation measures are widely watched by traders and investors to gauge its effects on the price of the USDJPY pair.
  • If you can also utilise currency correlations to your advantage, you may be able to factor greater returns into your profit calculator.

A negative correlation is one where you will find a reading of -.80 or higher. There is a general correlation between the USD/JPY and global equity indices. Two more examples are the French CAC 40 with a one-year correlation of 0.71 and the US 30 (Wall Street 30) with a one-year correlation of 0.72. The Japanese Nikkei 225 stock index is highly correlated to the USD/JPY due to Nikkei’s inverse correlation to the Japanese yen. The L2T Algo provides highly profitable signals with minimal risk.


However, the Tokyo time zone is not as volatile as the New York time zone. Even banks in Japan wait until the London trading session to conduct business. The USDJPY is open for trading 24 hours a day, five days a week, from 17.00 EST on Sundays to 17.00 EST on Friday. The forex calendar also factors this trading time since no market-moving news is scheduled over the weekend. However, there are instances where some unscheduled market-moving news will hit the newswires over the weekend. These create price gaps when the market opens for trading at 1700 hours EST on Sundays.

This is because the Federal Reserve has begun raising interest rates and has indicated that there are more rate hikes to come in 2022. Higher interest rates in the US make USD-denominated instruments such as US Treasuries more attractive, which increases demand for US dollars as investment money flows into the US. We do not speak of one currency pair being worth more than another in forex. But in terms of trading volumes, only the EURUSD and GBPUSD attract more daily trading volume than the USDJPY. In contrast, the US economy has experienced strong economic growth and inflation over the last decade, forcing the US central bank, the Federal Reserve, to adjust its interest rates more frequently.

The strategy that will be describing is a very specific type of consolidation range breakout system that is tailored to the USDJPY currency pair. We will not be using any trading indicators within this strategy and rely on just the price action on the naked chart for our analysis. In that regard, it’s a technical based price action trading strategy. Well, currency correlations are dynamic and different across various time frames.

There are certain pockets during the day when the volume and volatility tend to be the highest. These are the times where we want to pay the most attention to potential trade setups. It is during these periods where the bid ask spreads will be the tightest, the volatility will be the highest, and the volume will be at its daily peak.

Trading using Economic Data Releases

The interest rates set by the Bank of Japan (BoJ) and the Federal Reserve (Fed) are the primary factor influencing the USD/JPY price. For example, if the BoJ keeps its rates steady while the Fed raises interest rates, this could make the USD stronger than the JPY, causing the USD/JPY price to rise. This can create opportunities for traders to generate significant returns.

So, an understanding of this will allow you to use movements in other pairs to predict fluctuations in the USD/JPY. Currencies do not move independently of each other and the USD/JPY pair is no exception. In fact, the USD/CHF and EUR/USD are the two other pairs with the highest how to buy dogecoin stock correlation to the USD/JPY. The former has a positive correlation, and the latter a negative correlation. This is all the more reason to learn how to read the USD/JPY and conduct a thorough market analysis. IC Markets offer a diverse range of cryptos, with super small spreads.

How do you trade the USD/JPY pairing?

But the fact of the matter is, there are certain periods during the day that are better than others when trading specific currency pairs. The information on the website and inside our Telegram group is intended for educational purposes and is not to be construed as investment advice. Trading the financial markets carries a high level of risk and may not be suitable for all investors.

Why trade USD/JPY CFDs with

Because of this, the Japanese yen will continue to lose strength, especially against the titer central bank such as the Federal Reserve and its currency, the US dollar. Given enough time, I think that the market not only hits the ¥150 trader tv live level, but it breaks through there. It has been more or less a grind higher, but that means that it is more sustainable. Another benefit of trading USDJPY is the abundance of technical and fundamental analysis available on the pair.


The Yen is the currency of Japan, the world’s third-largest economy. When you feel good about your trading strategy, you'll be ready to use a live trading account with ATFX. In a carry trade, a trader borrows a currency with a low-interest rate (like the JPY) and uses it to buy a currency with a high-interest rate (like the USD). The chart above shows the best charting software for stocks USDJPY’s breakout from a recent support level, which was tested at least three times, signifying a key change in trend direction to the downside. The chart above displays the USD/JPY trend during an uptrend, signified by multiple tests of the trendline that occurred throughout the period. Learn how forex traders use candlestick charts to analyze trends.

The USD/JPY is affected by factors that influence the value of the U.S. dollar and the Japanese yen, in relation to each other and to other currencies. The interest rate differential between the policy rates of the Federal Reserve and the Bank of Japan (BoJ) is an important influence on the USD/JPY exchange rate. Higher interest rates make a currency relatively more attractive because they allow owners of assets denominated in that currency to earn a higher yield. This strategy involves trading based on economic news and data releases that can affect the USD/JPY exchange rate.

Gold, often regarded as a "Safe Haven" asset, has captured the interest of traders and inv… The chart above shows the USDJPY pair on a swing high towards the previous resistance level, but it failed to break above it, signifying a change in trend to the downside. This will let you practice trading the USD/JPY without risk, keeping your money safe. Big events in the U.S. and Japan can cause large price movements.

Tips And Tricks For Trading The USDJPY Currency Pair

All eyes might be on GBP/JPY, for example, and when the pair appreciates, investors expect general yen weakness elsewhere. This can cause the USD/JPY pair to fall, even if there isn’t a direct strengthening of the dollar. Although there are other ways to trade this currency pair, we’ll focus only on how it’s done with retail forex trading. In conclusion, this all means USD/JPY traders need to keep abreast of new data and information about Japan’s economic growth and recovery. So, if a rise in rates takes place and the popularity of the yen carry trade diminishes, this could result in a strengthening of the yen.

Expert Advisors (EAs) are also supported for automated trading strategies. The USD/JPY currency pair indicates how many Japanese Yen are currently needed to purchase one US Dollar on the global forex marketplace. This exchange rate will fluctuate constantly throughout the days, weeks, and months, owing to a multitude of economic and political factors. Even if you are quite new to forex trading, you will likely have already seen the abbreviation USD/JPY flash up on your screen countless times.