The US is one of Japan's biggest trading partners meaning the Yen is highly sensitive to US demand for Japanese electronics and cars.
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.
Trading the USD/JPY currency pair on Forex has been a popular choice for traders due to its liquidity and volatility. In this article, we will explain why it is profitable to trade the USD/JPY currency pair on Forex now, and how you can take advantage of this opportunity.
Search queries related to trading the USD/JPY currency pair on Forex have been increasing, which indicates a growing interest among traders. The USD/JPY currency pair is one of the most heavily traded pairs in the Forex market, and is often used as a barometer for global economic conditions. Traders who are able to accurately predict the direction of the USD/JPY exchange rate can potentially profit from its price movements.
One of the main reasons why trading the USD/JPY currency pair is profitable now is due to the current economic environment. The US economy has been recovering from the pandemic-induced recession, and the Federal Reserve has indicated that it may raise interest rates in the near future. Higher interest rates can lead to an appreciation of the US dollar, which can potentially increase the value of the USD/JPY currency pair.
In contrast, the Bank of Japan has maintained its ultra-loose monetary policy, which has kept the Japanese yen weak relative to the US dollar. This creates a favorable environment for traders who are bullish on the USD/JPY currency pair.
Another reason why trading the USD/JPY currency pair is profitable now is due to its volatility. The USD/JPY currency pair is known for its sharp price movements, which can provide opportunities for traders to profit from both long and short positions. Traders who are able to effectively manage their risk can potentially profit from the volatility of the USD/JPY currency pair.
To take advantage of these opportunities, traders should consider using technical analysis and fundamental analysis to make informed trading decisions. Technical analysis involves analyzing price charts and identifying trends and patterns, while fundamental analysis involves analyzing economic data and news events that can impact the USD/JPY exchange rate.
In conclusion, trading the USD/JPY currency pair on Forex can be a profitable investment due to the current economic environment and the volatility of the pair. By using technical and fundamental analysis to make informed trading decisions, traders can potentially profit from the price movements of the USD/JPY currency pair. If you are interested in trading the USD/JPY currency pair, now is a good time to start.
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.