USD/JPY belongs to the category of major currency pairs, that is, to the most traded pairs on the forex market since it includes the US dollar. Accordingly, the greenback is the base currency in the pair while the Japanese yen is the quoted one. In other words, this means how many Japanese yens can one US dollar buy. USD/JPY is the second most popular currency pair among investors thanks to the pair’s trading volume in the Asia-Pacific region. According to preliminary estimates, it accounts for about 19% of the total financial market turnover. At the same time, the majority of trades are conducted by Asian traders. Nevertheless, the USD/JPY pair is also popular among European and American traders. They often trade USD/JPY because the currencies included in the pair belong to the world’s most powerful economies. Japan is practically the only country in the world that has had a budget surplus for a long time. Meanwhile, the United States is the largest country in terms of GDP that constitutes almost a quarter of the global economy. Market participants find USD/JPY to be an unpredictable and tricky pair which is resistant to thorough market analysis. However, with time, it becomes clear that it is not entirely true. Sharp exchange rate fluctuations are sometimes difficult to predict. In such a case, detailed technical and fundamental analysis is of great help as it can indicate the riskiest trading moments. This, on the one hand, can save investors from incurring serious losses and, on the other hand, help them generate huge profits. As any other currency pair, USD/JPY has a set of its own unique features. First of all, it is the pair’s reaction to global political and economic events. Many experts compare the pair to litmus paper because of its immediate reaction to certain processes in the global economy. The main problem is that it is impossible to predict the pair’s response to various reports. Moreover, USD/JPY can run contrary to the general trend. Perhaps this is why it is extremely hard to analyze the further movement of the pair, as all preliminary forecasts are rarely confirmed. Secondly, USD/JPY is a highly liquid pair. This allows traders to use the minimum value of the spread. Thirdly, USD/JPY trading hits its peak during the night trading hours in Europe. This is the moment of hectic trading as Asian exchanges open. The busiest trading hours are from 4 am till 12 pm GMT+3. Importantly, the beginning of the Asian session is the most favorable moment for trading. In this regard, many traders have to work with this currency pair only at night. Finally, as mentioned above, the USD/JPY pair responds well to technical and fundamental analysis. Therefore, on the one hand, the pair is easy to work with. On the other hand, investors are forced to analyze events in greater depth because brief analysis will not do in this case. The most effective strategy for the USD/JPY pair is the London Explosion. Its key feature is to catch the most suitable trading moments before the immediate opening of the London session.
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