It’s true that the forex market remains open 24 hours a day and 7 days a week in different time zones of the world. But it does not mean that every moment is favorable for all types of trades. For forex, choosing the right currency pair matters a lot.
USD/JPY stands as a profitable currency pair not only for experienced traders but also for beginners. The major reason for the popularity of USD/JPY is low bid-ask spread and high liquidity.
Now the question may pop up in the minds of readers: When to trade USD/JPY? Let’s explore the answer in this post to the best time to trade USD/JPY.
Overall, the ideal time to start USD/JPY trading is generally 12:00-15:00 GMT as the time when market activity is at its peak. For the European market, the ideal time is between 7 AM to 4 PM GMT. For the USA market best trading hours are from Noon to 8 PM GMT. For EST, the best time to trade USD/JPY is from 7 AM to 11 AM.
When the New York and London market overlaps the trading activity reaches its peak. Trading volume changes rapidly between 12:00GMT to 15 GMT or sometimes a bit later.
Pros & Cons of Trading USD/JPY
Trading this pair has both positive and negative reasons. Let’s check out the pros and cons of trading USD/JPY below:
- Highly liquid pair
- High volatility
- Price movement is easier to predict
- JPY Correlation to Japanese commodity
- Low bid-ask spread
- Highly influenced currency pair from news
- Successful Trading requires news updates at a high level
- The News cycle of the USA & Japan both can affect
Best Time To Trade USD/JPY
The best time to trade this pair starts with a period of peak activity in the market. This time is full of a lot of profitable opportunities. Typically the pairs that include the U.S. dollar (USD) and Canadian dollar (CAD) are more active when New York is open for business.
However, the USD/JPY pairing is a bit odd in this regard. It is better to choose your own time zone or your forex broker’s time zone instead.
For day traders the ideal USD/JPY trading is between 12:00 and 15:00 GMT. The reason is that London and New York markets are both highly active in this period. Although Tokyo is still sleeping. You can see the highest price moves in these three hours. Sometimes this volatility remains high for one extra hour up to 16:00 GMT.
There are so many other time zones where you can dig profitable opportunities to trade this pair. Regularly watch monthly and daily statistics and charts to capture such moves. You can also observe the statistics regularly on Mataf to capture all possible trading opportunities timely.
Time To Avoid Trading USD/JPY
There are certain time periods during the day traders must avoid USD/JPY trading.
Firstly, Never ever trade this pair in times of low volatility. You can see a drop in volatility through hourly charts. If you keep on trading these hours the pips movement is not enough to withstand the spread/fees or commission. It will end up in losing your trade.
Secondly, avoid the time when Toko market is about to close and London plus Newyork markets are still not open. This time is between 3:00 to 5:00GMT. During this time the pair observe a drop in volatility.
Finally, try to avoid this pair trading at 21:00-24:00 GMT. It is time when the New York market has just closed, London is still sleeping. Moreover, the Tokyo market has not yet opened. When you trade and inquire about the market your earnings can be easily eaten by commissions.
Best Time To Trade USD/JPY In India
It is easy to convert the best trading hours from 12:00 to 15:00 GMT in Indian Time Zone IST.
The ideal time to trade this pair in IST is 17:30 IST to 20:30 IST. It is a time when both London and New York markets are in high activity. However, the Japanese market is still asleep.
It is better to ask your brokers about the ideal time zone of trading USD/JPY in local time. He will guide you much better. Globally the time between 17:30 to 20:30 is highly volatile for this pair. This volatility may prolong one more extra hour depending on the market situation.
Factor Affecting USD/JPY Price
Although this pair is stable, there are certain market triggers that can affect trading this pair in any time zone.
The first factor to consider is the role of Japanese Interest. The lower interest rates by the Bank of Japan may result in high-interest rates on trading JPY. Generally, the Bank of Japan tries to put tight control over interest rates, but if it rises high suddenly it can decrease the demand of USD/JPY in the market considerably.
Other factors may include inflation, wages, domestic growth, and the consumer price index. It is a highly traded pair globally. So any sudden change in its demand in other markets like Asia, China, and the USA can affect the price of this pair
Frequently Asked Questions
Will USD JPY go up or down?
To predict USD/JPY up and down position, it is important to overview the daily outlook. Each day is different from a trading perspective than the previous. There are ways to see hourly charts and Indicators to predict price moves in the future.
What affects USD JPY?
There are many triggers that can affect USD/JPY price moves. The main trigger is the Japanese interest rate, trading time, demand and supply, any sudden news about Japan or the US economy. This pair can drop considerably with any sudden political, economical and socio-economical news.
Is JPY stronger than USD?
No, JPY is weaker than USD. I JPY=0.0088USD. USD is more stable and an all-time stronger than JPY. However, in JPY/USD the Japanese interest rate can move the demand of this pair up and down considerably.
To conclude, the best time to trade USD/JPY is when London and New York markets show peak activity. It is a heavily traded pair throughout Asia. Practically, there is no best time for trading any pair because different traders use different strategies.
You can choose the time that you are comfortable with your strategy. But keep this in your mind, high liquidity is a great indicator to trade this pair profitably. Do fundamental analysis and technical analysis properly before trading any pair. Check statistics of the price move in different time zones to make accurate trading decisions.