HowToTrade.com provides our readers with a daily market analysis for the USD/JPY, including the latest news, USD/JPY price, updates, and price forecasts from our trading experts.
The USD/JPY is a popular FX currency pair among forex traders and investors. Since it is one of the 7 major currency pairs and the second most traded FX pair, it is no surprise that many prefer the USD/JPY as a trading asset to focus on. The high liquidity, narrow spreads, and volatility are some of the reasons the USD/JPY is such a popular FX asset.
A retail forex trader can trade the USD/JPY through a forex contract in the OTC market or with a contract for difference (CFD). A CFD contract enables you to speculate on the price of the USD/JPY without owning the underlying asset, which is ideal for many who have no interest in physically purchasing currencies.
Simply follow these steps to start trading the USD/JPY:
Like all FX currency pairs, the USD/JPY is influenced by central bank policies, economic data, geopolitical events, and changes in interest rates. Another key factor that influences the exchange rate between the Japanese Yen and the USD is the Yen’s role as a safe-haven asset. As such, when there’s uncertainty in the markets, particularly in China and other Asian countries, the Yen might get a boost and strengthen versus the US Dollar.
.Many trading strategies can be used to analyze USD/JPY price movements. However, one effective technique is the carry trade strategy, which basically refers to a technique of buying a high-interest currency and selling the other. Since Japan has had very low interest rates since the early 90s, traders often exploit the interest rate differentials between the two to buy the US Dollar and sell the Japanese Yen.
Absolutely. The USD/JPY currency pair has enough volatility and liquidity to make it a good asset for short-term trading strategies. Yet, if you wish to day trade the USD/JPY, you must find a brokerage firm that offers low spreads. This is a crucial aspect for successful short-term trading.
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