What it means
USD/JPY quotes USD priced in JPY (e.g., 150.25 means 1 USD = 150.25 JPY). Pip = 0.01 JPY, two decimals instead of four. Pip value in dollars depends on the current rate: at 150, $10 / pip on a USD/JPY mini-lot becomes ~$0.67. The pair has been the cleanest carry-trade expression for two decades because of persistent Fed-BoJ rate differentials.
Why it matters
USD/JPY is the canonical carry pair — long means receiving USD rates, paying ~0% JPY rates. The pair's structural sensitivity to risk-off events (yen rallies when global vol spikes) makes it a global-risk barometer, not just an FX trade. When global equities sell off, USD/JPY tends to drop 1-3% even if neither US nor Japanese fundamentals changed.
How to use it
Treat USD/JPY as a risk-on/risk-off proxy alongside the directional view on US-Japan rates. Watch the 4pm London fix on month-end (large pension flows). Mark BoJ verbal intervention thresholds (in 2024-2026 era, ~160 historically triggered MoF response).
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