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Explore the live buy, sell prices, and spread of USD/JPY. Learn about trading opportunities, factors that move USD JPY, and common pitfalls to avoid in your trades.
Summary
Within the context of Forex trading, the USD/JPY quote indicates the number of Japanese yen (JPY) required to purchase one United States dollar (USD). Because the dollar remains the world's primary reserve currency and the yen is Asia's most actively traded currency, the USD/JPY pair is one of the most liquid and widely watched in the foreign exchange market. Traders value it for tight spreads, deep liquidity, and its clear reaction to interest-rate differentials between the US and Japan.
With U.S. overnight rates still sitting roughly four percentage points above Japan's, going long USD/JPY earns a positive swap every night. The trade works best when yield spreads are widening and global risk is calm. Monitor the Fed funds futures curve, BoJ meeting chatter, and your broker's daily funding quote; an unexpected hike in swap cost can erase weeks of gains.
Between 00:00 and 03:00 UTC, economic calendars are usually empty, liquidity is decent, and USD/JPY tends to oscillate inside a 20- to 25-pip band. Many intraday traders place limit orders at the prior session's extremes and aim for modest 8-to-12-pip turnarounds with tight stops. Be out before European desks log on; that is when directional momentum often starts.
The first Friday of each month at 12:30 UTC, US payroll data can add or subtract a full yen in minutes. A standard play is to bracket the market, setting buy and sell-stop orders roughly 15 pips above and below the spot, approximately 15 minutes before the release. Once one side triggers, cancel the other, move the stop to breakeven after +20 pips, and look to exit by the top of the next hour. Expect slippage; consider sizing down or using guaranteed stops if you are new to news trading.
Driver
Why it matters
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Shifts in the Fed's versus BoJ interest-rate paths directly affect the dollar-yen yield spread, often the primary catalyst for spot moves.>>
US CPI surprises can fuel expectations of faster or slower Fed tightening, while Japanese inflation has historically remained low, anchoring BoJ policy.>>
The yen tends to strengthen when equity or credit markets stumble, reflecting repatriation flows and its reputation as a haven.>>
Large, sudden jumps in USD/JPY often coincide with coordinated or unilateral BoJ/MoF currency-buying or selling operations.>>
Trade flows and the relative attractiveness of US Treasuries vs Japanese Government Bonds (JGBs) shape longer-term trends.Disclaimer: Keep in mind that monetary policies, geopolitical tensions or recent macro data can quickly change the direction of this pair.
The positive swap on long USD/JPY positions tempts newcomers to run 20-30x leverage, assuming the nightly credit will cover minor pullbacks. A single dovish Fed rumour or BoJ intervention headline can erase weeks of rollover in one 80-pip spike.
How to dodge it: Size positions so that a 150-pip move equals no more than 2% of account equity. Use a trailing stop (rather than swap income) as primary protection, and scale back exposure whenever Fed-funds futures start pricing cuts or Japan's Ministry of Finance hints at currency action.
Around 15:00 Tokyo (06:00 UTC), banks square positions to set the daily reference rate used for settling large yen-option books. In the five minutes beforehand, desks may push spot 20-30 pips to secure a favourable fix, triggering tight retail stops.
How to dodge it: Either flatten or widen stops between 05:55 and 06:05 UTC. If you must stay in, wait for the post-fix retrace—flows often reverse once the rate is locked.
When Japan or the US is on holiday, depth vanishes; a modest algorithmic order can shove USD/JPY dozens of pips with no news behind it. Traders jump aboard the move, only to watch it fade when full liquidity returns.?
How to dodge it: Check a dual-holiday calendar every Sunday. Halve position size on single-market holidays and consider sitting out when both markets are closed. If you trade, accept wider spreads, and always use hard stops.
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Find answers to commonly asked questions about forex trading on Taurex, including topics related to account setup, platform features, trading conditions, and more.
The BoJ's target rate is typically much lower than the US Fed's benchmark rate, which supports yen-funded carry trades. If Japanese rate expectations rise in the future, this advantage for carry trading could narrow, impacting the USD/JPY pair and the attractiveness of carry trade strategies.
Higher Treasury yields increase the cost of hedging US assets back into yen, making dollar-denominated investments more attractive. This usually lifts the USD/JPY pair. When yields fall, the dollar often loses strength against the yen.
The tightest spreads typically occur when trading sessions in Tokyo, London, and New York overlap, which is between 12:00 and 16:00 UTC. During this time, liquidity is high, and spreads may narrow to under 0.5 pips. Volatility can also spike around 23:50 UTC when Japan publishes key economic data.
Since the yen is the quoted currency, the pip value varies with price. When USD/JPY trades near 146, one pip (0.01 yen) is worth about $0.68 per 10,000-unit micro-lot. Many trading platforms include pip calculators to help traders manage risk effectively.
Retail leverage is usually capped at 50:1 in the US and 30:1 in Europe. At current price levels, opening a standard 100,000-unit lot of USD/JPY requires a margin of around $3,000 to $5,000, depending on the broker and regulatory region.
