USD/JPY — the US dollar against the Japanese yen — is a major Forex pair with a personality all its own: it's closely tied to interest rates and acts as a barometer for global risk.
What drives USD/JPY
- The rate gap — the difference between US and Japanese interest rates is the dominant driver. For years Japan held rates near zero, making the yen a classic "funding" currency.
- The carry trade — traders borrow cheap yen to buy higher-yielding assets. When that unwinds, USD/JPY can drop fast and violently.
- Risk sentiment — the yen is a "safe haven." In panics, money flows into yen and USD/JPY tends to fall.
Things that make it distinctive
- Quote convention — it's priced to two/three decimals, and a pip is the second decimal. The pip-value calculator handles the math.
- Asian-session liquidity — unlike most majors, USD/JPY is active during the Tokyo session as well as London and New York.
- Intervention risk — Japanese authorities have historically stepped in to influence the yen, which can cause sudden spikes.
A measured approach
Respect the macro backdrop — USD/JPY trends can be long and rate-driven. Trade with the higher-timeframe direction, enter at clear levels, and keep risk fixed per trade with the position-size calculator. Be especially careful holding through major central-bank events.
USD/JPY is where interest rates and fear meet. Know which one is driving before you take the trade.
Education only — not financial advice.