USD/JPY - characteristics and features of the currency pair US Dollar Japanese Yen – trading in New Zealand

The USD/JPY is considered one of the most popular and widely traded quoted currencies in the world, as in addition to the fact that they both use the US dollar as their base currency, they also have a safe haven status, being the second most traded currency in Asia. USD trends follow a symmetrical pattern, meaning they tend to rise when the US dollar strengthens and fall when the dollar weakens.

In general, USD/JPY is considered a fundamental exchange rate because of its close association with Japan and the U.S. dollar. USD trends are projected to continue to move in a downward direction as Japan's economic growth continues to grow and popularity among global consumers increases. A weakening of the U.S. dollar against the Japanese yen is expected in the near future. The USD/JPY exchange rate is likely to peak in 2021. USD/JPY will come under pressure from a strengthening US dollar and is likely to lose ground against the Japanese yen.

Currency pair information
Currency pair information

Most of Japan's population trades in U.S. dollars. Thus, the U.S. dollar has become the most traded currency pair in Japan. This high level of trade between the Japanese yen and the U.S. dollar is mainly due to the high demand in the Japanese market for products made in the United States by Japanese people traveling abroad and Americans who frequently visit Japan. Major economic indicators suggest that the trend towards strengthening of the Japanese Yen will continue. The USD/JPY could depreciate or rise over time, but the direction of the USD/JPY remains upward. At the moment, it is highly advisable for traders to buy the Japanese Yen until the situation normalizes in the U.S. markets. 

What are currency pairs? 

Simply put, a currency pair is two currencies that are valued at the amount of one country's currency in the other country. A currency quote in the market is the current exchange rate for the two currencies. More specifically, it is a measure of how much a particular currency will be worth on a certain date in U.S. dollars.

Why would anyone want to trade currencies in the market? One reason is price stability. A stable market allows traders and investors to buy or sell a particular currency, knowing that the price will not suddenly rise or fall. Another reason to invest in currency pairs is higher liquidity. Liquidity means how many times a particular currency can be bought or sold within a certain period of time.

Economic events
Economic events

One of the best features of the currency market is that it is able to provide us with real-time quotes. These quotes can provide the trader with the current price of one of the underlying currencies used in the trade. This can allow a trader to make a decision to buy or sell before the market opens so that they can complete their trades as soon as possible. It can also help the trader decide which currency is best to use, which will ensure that he makes a profit throughout his trading activity. 

Currency Prices  

For most of us, when we hear the term "currency prices," what comes to mind is the price of a particular currency. We think of it as a monetary unit, which is usually the U.S. dollar. More often than not, the term "countercurrency" is used to refer to any currency other than the U.S. dollar. These other currencies are traded in the same way as U.S. dollars.

The main difference between the two types of market transactions is that foreign currencies are bought and sold through a specific financial institution. There are several different financial institutions that trade foreign currencies on a daily basis. Some of them trade more common foreign currencies, while others trade more exotic currencies. Such a financial institution is called an online broker.

News about the USD/JPY currency pair
News about the USD/JPY currency pair

Currency traders are constantly buying and selling currencies. Currently, the buy and sell prices at which they decide to buy and sell depend on the state of the market, that is, the conditions that prevail at the moment. For example, when the market is in a "bullish" trend, traders expect the price of currencies to rise. When traders believe the market is "bearish", they move into a sell position. A buyer usually makes a counter-sale when he sees that another trader has bought a particular currency on the terms of his bid and ask. 

In addition to the methods used when trading currency on the market, some other factors should also be taken into consideration. The strength of different international currencies should also be analyzed. Some currency pairs are strong and others are weak. The strength of currencies should be evaluated along with other important factors such as the political and economic scenarios of the respective country. 

Trading sessions 

Most novice traders do not know what to pay attention to during the trading session. This is one of the main reasons why trading is slow and most sessions don't make much profit at all. In order to have maximum potential, novice traders need to take advantage of the trading hours in the Middle East. These trading hours are in two major markets, namely Asia and the Middle East. The difference between these markets is the opening hours. Most trading sessions run twenty-four hours a day.

This allows traders to take advantage of the best time of day. They can buy and sell during the four hours of daily trading hours. Therefore, traders prefer to trade in the market during the Middle Eastern session because they can make their four-day trades at that time. They do not have to worry about having an open trading position during the day or any other time. However, to take advantage of the best time, traders need to have a good indicator or system that can give them signals about when to enter and exit trades. This means using indicators and systems that work around the clock.

Traders tend to make trades when the major financial markets are open. This is a very important factor because it allows them to make trades before the markets open and lock in profits before the markets open. 

However, it also means that they must get in and out before the markets close in order to have time to get in and out of the market and lock in profits. There are many reasons why traders want to make trades before the markets open. The most popular reason is that traders can take advantage of the higher volatility of the currency market during predetermined trading sessions.

USD/JPY trading conditions
USD/JPY trading conditions

Volatility is another important factor that traders use to enter and exit trades. The higher the volatility, the more opportunities for traders to make profitable trades. 

Traders are not limited to the main trading hours of the exchanges. They also pay attention to two other time periods - the intraday period and the secondary trading hours. The duration of the intraday period is very short, a few hours in the afternoon and evening, while the secondary trading hours cover most of the day (and most of the weekend) in most of the world.

Intraday traders also want immediate access to the information they need. They are likely to want to know about the latest developments as soon as possible - News, local events and economic news are all important factors that affect currency prices and trading sessions. In fact, experts believe that investors trade more in the morning and less in the afternoon, when most market activity occurs.

Another aspect that traders take into account when trading is the overlap of major international markets. The U.S. and European markets overlap in the afternoon and open on Friday. Many European markets also overlap with the U.S. and European markets by Friday evening and again on Saturday morning. For this reason, most traders prefer to trade Friday and Saturday afternoons. This allows them to take advantage of the overlap of the four hours. 

Trading Time Frames

Market trading time frames, sometimes called tickers or frames, are widely used in the financial world to determine the most appropriate time to make trades. Traders can make one or more trades depending on the timeframe chosen. They are also used to determine which way the market will move. 

Simply put, these time frames indicate price activity in the market and provide market participants with the information they need to execute trades efficiently.

USD/JPY currency pair chart
USD/JPY currency pair chart

A time frame is the elements (candles) that are formed on a chart over a period of time, which is set by the trader himself. Traders trade in different timeframes, usually choosing which one will be most convenient for them to use, based on their strategy. Here is a list of all timeframes, which you will be able to find on your investment platform: 

  • M1 - 1 minute;
  • M5 - 5 minutes;
  • M15 - 15 minutes;
  • M30 - 30 minutes;
  • H1 - 1 hour;
  • H4 - 4 hours;
  • D1 - 1 day;
  • W1 - 1 week;
  • MN - 1 month. 

Trading strategy 

Each trader has his own trading strategy which he uses for trading. Some stick to their trading strategy and achieve good results. Others find that their strategy doesn't work as well as they would like, and they have to adapt. One of the best things you can do when learning to trade the market is to adapt your strategy as you go along.

Since the early days of trading, many currency trading strategies have been developed. The most common of these strategies are the simple "short sale" and "long short" trading models. These models do not differ much from each other. In both models, traders predict currency price declines before they occur. They use certain strategies in anticipation of market prices falling.

Choose a currency pair
Choose a currency pair

Short-term trading strategy is where most beginners start. The reason most beginners start with this strategy is because it is very easy to learn and easy to trade. In addition, it gives the biggest profits in the shortest amount of time. This strategy can work very well for beginners, but it is also one of the main reasons why many traders get started in trading.

The short-term approach to trading the market involves knowing when to buy and when to sell. You set a stop loss and when you reach it, you sell your currency. The idea is to take losses so that you don't lose everything in the process of trading. It's also a great way to grow your capital without all of the emotions that accompany long-term trading in the market. It can be extremely stressful, and winning can sometimes feel like a roller coaster ride!

The short-term approach to the market has several advantages. First, it allows you to quickly adapt to changes in the market because you are trading such small amounts. Also, because you are investing such small amounts, you are not dealing with a lot of emotion. You won't make any mistakes because you are reacting to what you perceive to be happening, rather than basing it on cold facts and market data.

One of the advantages of this strategy is that you can control your investments. Because you invest smaller amounts, you can sometimes buy or sell based on your intuition. Also, because trading hours are shorter, you have more time to react to changes. Of course, since the trades happen so quickly, you need to have a good trading strategy to guarantee profits or losses.

If you are new to the market world, you should start with a practice account. When you learn more about the market's trading strategies, you can move on to a real account. A practice account can be ideal for the learning process. You can never tell how far you will be able to go with any particular trading strategy. It all depends on you. Just remember that short-term strategies are great for learning and practice, and long-term strategies are great for confidently climbing to financial independence. 

Peculiarities of the currency pair USD/JPY 

USD and JPY are two currencies on the market. They represent different elements when it comes to investing. The USD is a bond, and it has certain interest rates. Whereas the JPY is a currency that is backed by the Japanese yen. Although they are traded together, they have their own characteristics that set them apart from each other.

USD and JPY are valued according to the market price in the market at any given time. The difference between the two is that the USD always has a fixed rate, while the JPY has a floating rate. This causes the U.S. dollar to move up or down depending on prices. One of the biggest differences is that the latter currency pair has a higher daily range than its counterpart.

The USD and JPY are also different when it comes to their historical range. In the USD it rises and falls depending on market conditions. In the Japanese Yen, however, it does not change much depending on changes in the economy. That means that most of the time there is no movement. The only time when the pair can show a movement in the daily range is a monthly period.

USD and JPY are characterized by stability. USD usually trades above or below key resistance levels and this is quite normal for any currency pair. The JPY, on the other hand, rarely makes a pullback. They tend to trade in the direction of the stronger currency and do not fluctuate too much against the base currency. They also tend to have a very narrow range in which they can trade.

Study the chart and start trading!
Study the chart and start trading!

Price changes are important because they provide important information about the driving forces behind them. When there is a price change, there is a fundamental reason behind the change and that is what we call the economic driving force. For example, when there is a 5 percent change in the Japanese market, orders may rise and cause the Japanese economy to suffer if the price level is not controlled. If the price level goes up, the employment rate also goes up and the economy suffers.

On the other hand, when there is a rise in USD/JPY prices, market orders begin to fall, which causes the economic indicators mentioned above to decline. This means that there is a change in momentum and the market reacts accordingly. However, the market reacts differently than the U.S. economy, which is why the Japanese economy is able to absorb large currency pair shocks without significant negative consequences for the Japanese economy. However, for the Forex market, the above description of the two currency pairs is somewhat misleading, because in fact the USD/JPY pair can undergo significant changes if the economic situation in either country suddenly changes. Such changes are called "fluctuations", they occur regularly in the market and are responsible for most of the profits and losses experienced by a trader in the market. 

Interesting Facts 

Let's take a closer look at the world's most actively traded currencies individually.

Of the currencies we are interested in, the dollar is in the first place, and the Japanese yen is in third place.

  1. US dollar (USD);

  2. Euro (EUR);

  3. Japanese Yen (JPY);

  4. British pound sterling (GBP);

  5. Australian dollar (AUD).
  • USD

The official currency of the United States, the U.S. dollar, is also the world's main reserve currency. It belongs first in our list of the world's most traded currencies, and all thanks to the fact that 87% of all foreign exchange transactions are conducted with the U.S. dollar. When such commodities as gold and oil are traded, their exchange rate is set in dollars. The U.S. economy is the largest in the world, and the U.S. dollar exchange rate is highly dependent on the economic performance of their country.

  • JPY

The Japanese yen is the official currency of Japan and is the third most traded currency in the world. With an average daily turnover of more than $550 million (according to the Bank for International Settlements). (according to the Bank for International Settlements), it also accounts for 4.9% of international foreign exchange reserves. The yen is considered a safe haven currency thanks to very low interest rates, low national debt and a high trade surplus in Japan. All these factors ensure the stability of its economy. 

In periods of volatility and uncertainty in financial markets, investors dump their riskier and higher-yielding assets and cover their currency positions with the less profitable, but more stable Japanese yen. Given the changing international currency market environment due to the prevalence of ultra-low interest rates, it will be interesting to see if the yen can maintain its safe-haven status.

How to start trading USDJPY in New Zealand

Once you've studied all trading strategies and familiarized yourself with the market's terminology, you can start looking for an investment platform. It should meet all your requirements and suit your investment platform's functionality. 

Registrating on the investing platform
Registrating on the investing platform

Once you've chosen an investment platform, you need to sign up for an account with an online broker. Once you have completed the registration process, you can open an account right away, or you can use the practice account service. 

If you decide to trade with real money, you will need to add funds to your account. To do that you will need to verify the account in order to secure your data and personal funds. 

Don't rush to make a huge deposit, many online brokers allow you to start trading from $10.  

When you open an account in New Zealand, there are some important points to consider. First of all, you should know the current dollar exchange rates. This will help you decide if you want to buy or sell currency.

Here are some of the basic things you should know about how to start trading USDJPY currency in New Zealand. The best part about trading is that you can make a lot of money in the process. Don't be intimidated by the new concept - it will soon become clear.

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