USD/JPY United States Dollar / Japanese Yen

USD/JPY represents US dollars traded against Japanese yen on the forex market. Its price denotes how many yen amount to one dollar. Unlike other forex pairs, currency pairs like USD/JPY with yen as the counter currency have pip values in the second decimal place.

The main influences on USD/JPY are the interest rates in both countries. Japan typically keeps an extremely low interest rate, while the US will raise and lower the interest rate as deemed necessary. When the US dollar has a high interest rate, USD/JPY becomes a popular carry trade currency pair.

The value of USD/JPY also correlates closely with the price of US treasuries. When US interest rates rise, treasury prices go down. This lifts the US dollar and lowers the rate of USD/JPY.

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Interesting facts

USD/JPY represents the amount of Japanese yen that can be purchased with one US dollar. At the time of the Breton Woods System the yen was fixed to the US dollar at 360JPY per 1USD, but the exchanged only lasted until the US abandoned the gold standard in 1971. Since then the yen has appreciated significantly against the US dollar. The yen is the third most traded currency in world, behind the US dollar and the euro.

Price drivers

The US dollar can be influenced by US labor market data – including the monthly non-farm payroll (NFP) results and the unemployment statistics – US GDP and inflation data, interest rates and the Fed.

The yen is also sometimes thought of as a safe-haven trade, and the currency is sometimes hit with repatriation flows during times of economic crisis. Also, domestic data has an impact on the price of JPY, especially Japan’s trade balance, inflation, employment and GDP data.

Pivot Points

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    Distance shows the difference between the pivot point and bid rate. It is calculated by subtracting the ask rate from the pivot point rate.

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Understanding Pivot Points

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