The main driver of the Japanese yen/U.S. dollar currency pair isn’t just a matter of Treasuries but of the interest rates in both Japan and the U.S as well. The pair carries a measure of risk that determines when to buy or sell the USD/JPY in terms of the interest rates that determine their direction.
Many find it complicated to trade the Japanese yen against the U.S. dollar but it can become less complex when the yen is understood in terms of U.S. Treasury bonds, notes, and bills. A good broker can help you sort through the process as well.
Key Takeaways
- USD/JPY represents the currency exchange rate for the U.S. dollar and the Japanese yen.
- The USD/JPY currency pair has traditionally had a close correlation with U.S. Treasuries.
- Treasury bond prices go down when interest rates head higher and this lifts the U.S. dollar, strengthening USD/JPY prices.
- The USD/JPY pair can also be a determinant of market risk.
