USDJPY is a currency pair that connects the western countries with Asia
The USDJPY currency pair reflects the value of one US Dollar in the Japanese Yen. This currency pair basically connects Western Countries with Asia, and accounts for around 14% of the total turnover on the FOREX market. Japan is one of the biggest exporters in the world. Another key characteristic of this pair is the fact that the Bank of Japan is famous for its frequent interventions in the currency market, that may cause abrupt movements of the USD/JPY market.
Both US dollar and Japanese yen are considered to be in the group of reserve currencies. This means that major central banks keep them, in order to manage currency rates or for international trade settlements.
Another function of reserve currencies is that they may serve as an additional diversification instrument in moments of international recession or economical disturbances.
Rule of thumb
The monetary policy of Japan should be closely followed due to the Bank of Japan’s frequent interventions