What Factors Can Influence the Trading of USD/JPY Currency Pair?

What Factors Can Influence the Trading of USD/JPY Currency Pair?

May 18 • Forex Trading Articles • 1191 Views • Comments Off on What Factors Can Influence the Trading of USD/JPY Currency Pair?

The US dollar and the Japanese yen are undoubtedly the most frequently traded currency pairs inside the foreign exchange market. Both seasoned shoppers and people who have never shopped do well with these two things.

When will the market for USD/JPY start?

Even though selling happens constantly, most people buy in the UK between 8:00 AM and 5:00 PM. There is a possibility that on certain days this currency pair will trade the most. This happens whenever there is important news about the market.

In the following parts, we’ll examine how the US dollar/Japanese yen exchange rate has changed over time, what factors affect it, and why USD/JPY trading is still popular.

How can you trade USD/JPY CFDs?

By buying a forex contract or a contract for difference (CFD) on the pair, a trader in USD/JPY can bet on the change in the value of the two currencies.

Contracts for difference (CFDs) are a type of financial contract in which a broker and a customer agree that the broker will pay the client the difference between the value of a security at the beginning of the trade and the value of the security at the end of the trade. 

If the price goes up, you can take a long position. Because CFDs are often used for a short time, this is a transaction or investment with a short-time perspective.

Variables that affect the USD/JPY CFD

We’ll look at these things in the next two parts, but remember that every currency pair differs. We’ll start with what affects the value of the US dollar and then move on to what affects the value of the Japanese yen.

·        USD role

As the world’s most traded money, the US dollar’s value changes based on various factors. The papers the US Federal Reserve Bank (Fed) put out are some of the most important. Traders could use this information to guess how the market might change.   

US Non-Farm Payroll data are usually released by the Bureau of Labour data on the first Friday of each month. The USD/JPY exchange rate will change based on how the news might affect the value of the USD.

·        JPY role

Compared to other countries, more and more complex things could affect the yen’s value in Japan. A country’s imports and exports, as well as its overall economic health and events in the government, can have an effect. But here’s something you may have yet to think of.

Events in the region, like natural (or national) tragedies, can greatly affect Japan’s income. All such things will send the yen value into a tailspin. This will result in a huge change in the exchange rate of the US dollar and the Japanese yen.

Bottom line

Like the other major currency pairs, the USD/JPY pair is very volatile and has tight spreads, which gives foreign exchange (Forex) dealers many options.

But this isn’t the only thing that makes people want USD JPY. The many trades and small differences between the bid and ask prices show that the pair is popular.

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