Forex · Instrument guide
USD/JPY trading
How the dollar-yen pair behaves, why yields and the Bank of Japan matter so much, and how its pip differs from other pairs.
What is USD/JPY?
USD/JPY is the price of one US dollar in Japanese yen. A quote of 150.00 means one dollar buys 150 yen. The dollar is the base currency here, so buying the pair means you expect the dollar to rise against the yen.
It is a major pair and the main way traders express a view on Japan. It trades heavily in Tokyo as well as in London and New York.
What moves USD/JPY?
US Treasury yields are the strongest single driver. When US yields rise relative to Japanese yields, holding dollars pays more and the pair tends to climb. When yields fall, the pair often drops. Many traders keep the US ten-year yield on screen beside the chart.
The Bank of Japan sets the yen side. Years of very low rates made the yen a funding currency for carry trades, where investors borrow yen cheaply to buy higher-yielding assets. Any hint that the Bank of Japan will tighten policy can unwind those trades fast and lift the yen.
The yen also draws demand in stress, because Japan holds large foreign assets that can be brought home. Japan's Ministry of Finance has stepped in to sell dollars and buy yen before, and even the risk of such intervention can cause sharp reversals.
When is USD/JPY most active?
USD/JPY is active in both the Tokyo and New York sessions. Japanese data and Bank of Japan news land during Asian hours, while US data lands in the New York morning. The London session sits between and often carries the trend.
Thin liquidity near the Tokyo close and the weekly open can produce abrupt moves. Plan around the forex market hours map, and remember daylight saving changes the overlap times.
How does a pip work on USD/JPY?
On yen pairs a pip is 0.01, the second decimal. The profit is first counted in yen, because yen is the quote currency, and then converted into your account currency. That makes the pip value move with the exchange rate itself.
Hypothetical example: USD/JPY is at 150.00 and you hold one standard lot of 100,000 dollars. One pip is 0.01 × 100,000 = 1,000 yen, or about $6.67 (1,000 ÷ 150.00). If the pair rises from 150.00 to 150.50, that is 50 pips, or about $333. If the rate moves to 140.00, the same pip is worth about $7.14.
What are the risks of trading USD/JPY?
The pair can trend calmly for weeks and then drop 300 pips in a day on an intervention headline or a policy surprise. That kind of gap can skip your stop-loss entirely.
Carry-style positions also pay or charge swap each night, depending on the interest gap and direction. Swap rates are shown in the platform specification and change over time. Leverage multiplies every one of these effects, and you can lose more than your deposit.
Which events should you watch?
Put these on your economic calendar view.
- ✓ Bank of Japan policy meetings and the governor's press conference
- ✓ Japan's Ministry of Finance comments on the exchange rate
- ✓ US non-farm payrolls, inflation and Federal Reserve meetings
- ✓ US Treasury auctions and the ten-year yield
- ✓ Tokyo consumer price inflation
How do traders approach USD/JPY?
Many traders treat USD/JPY as a yield trade. They compare the direction of US Treasury yields with the pair and look for moves that lag. If yields jump and the pair has not followed, some expect a catch-up. This does not always work, particularly when intervention risk is high.
Others trade it as a risk gauge. When shares sell off sharply, the yen often strengthens and the pair falls. When markets calm, carry trades can rebuild and the pair drifts up. Reading an equity index such as NAS100 alongside it can help.
Large round numbers act as magnets, so traders watch levels such as 150.00 closely. Orders cluster there, and price can stall or spike around them.
Does your account currency change the risk?
Yes. If your account is in dollars, a USD/JPY profit in yen is converted back at the rate at that time, so the dollar value of each pip changes as the rate moves. A lower USD/JPY means each yen pip is worth slightly more in dollars.
If your account is in another currency, there is a second conversion. The platform handles this, but your stop distance in pips will not map to a fixed sum. Check your risk in money before entering, using the pip calculator.
How do you trade USD/JPY as a CFD?
A USD/JPY CFD follows the pair so you can take either side. AQ Markets offers it with its forex CFDs on MetaTrader 4 and 5. Contract details, swaps, margin and hours should be read from the instrument specification in the platform.
Work out risk in money before you enter. Try a demo account first, and compare account types when you are ready for live trading.
Risk note. CFDs are leveraged products. Prices can move quickly against you, and losses can exceed your deposit. This guide is general education, not personal advice. Read the Risk Disclosure before you trade.
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