USD/JPY: two decimals, moving pip value, and the risks unique to the yen
The pair where the arithmetic from EUR/USD stops working. Why one pip is 0.01, why its value keeps changing, the carry trade, and the intervention risk that does not exist elsewhere.
USD/JPY is the US dollar priced in Japanese yen. At 147.82, one dollar costs 147.82 yen. It is among the three most traded pairs, and it is the one where the arithmetic you learned on EUR/USD stops applying.
What you are trading
| Item | Value |
|---|---|
| Base currency | US dollar (USD) |
| Quote currency | Japanese yen (JPY) |
| Pip | 0.01, the second decimal |
| Pip value, 1.00 lot, dollar account | About $6.77 at 147.82, and it changes with the rate |
| Nickname | Gopher, or simply the yen |
The two decimal places, and what they break
Yen pairs are quoted to two decimals rather than four, so one pip is 0.01 and a move from 147.82 to 148.82 is 100 pips, not 10,000. Most brokers add a third decimal, which is the pipette.
Two practical consequences:
- A stop in points is ten times a stop in pips, exactly as on a five-decimal EUR/USD, but the absolute numbers look unfamiliar so the error is harder to spot.
- Pip value is not fixed. One pip on a standard lot is 1,000 yen, and what that is worth in dollars depends on the current rate. At 147.82 it is about $6.77; at 130 it would be about $7.69. There is no number to memorise, which is why the pip calculator exists.
The sizing error this causes is real. Someone who assumes $10 per pip out of habit sizes a position about 48% larger than intended.
What moves it
USD/JPY is driven more cleanly by one thing than most pairs: the interest rate gap between the United States and Japan. Japan held rates near or below zero for decades while other central banks moved, which made the yen the world’s funding currency and made this pair a close proxy for US yields.
- US bond yields. The pair often tracks the 10-year US Treasury yield closely enough to be used as a sanity check.
- Bank of Japan policy. Rare, long-signalled, and violent when it changes.
- Risk sentiment. The yen strengthens when markets are frightened, so USD/JPY tends to fall in a crisis even when the cause has nothing to do with Japan.
- Intervention. Japan’s Ministry of Finance has historically intervened directly when the yen weakened rapidly, producing sudden multi-figure moves with no scheduled announcement. This is a genuine tail risk that does not exist on EUR/USD.
The carry trade, and why it matters even if you never do it
When Japanese rates are far below US rates, holding a long USD/JPY position earns positive swap. Large funds borrow cheaply in yen to buy higher-yielding assets, which is the carry trade.
The relevant feature is its shape: it pays a small, steady amount for long periods and then unwinds violently, because everyone is on the same side and exits at once. Positive swap can quietly encourage you into a position whose risk is not symmetrical. It is worth knowing that the pair has this characteristic before deciding that holding it is cheap.
When it moves
Unlike EUR/USD, this pair is active in the Tokyo session, 00:00 to 09:00 UTC, where Japanese flows and data land. It then gets a second wind during New York, driven by US data and yields. The London hours in between are often the quietest part of its day, which is the reverse of the European pairs.
Practical notes
- Set the pip size correctly in any tool or automated system: 0.01, not 0.0001. Getting this wrong misstates every stop, target and position size by a factor of 100.
- Swap is asymmetric. Long and short are not mirror images, and a strategy that holds for weeks can be meaningfully helped or hurt by it.
- Intervention risk. Stops do not protect against a gap, and this is the major pair where sudden official action is most plausible.
Calculate before you trade it
- Pip calculator: pip size 0.01, and the rate field set to 1 divided by the current USD/JPY price.
- Position size: use the pip value from above, not 10.
Related
- EUR/USD and GBP/USD.
- Pips: why this pair is the exception.
- Market hours.
Frequently asked questions
Why is a pip 0.01 on USD/JPY?
Yen pairs are quoted to two decimals rather than four, so the second decimal is the pip and a move from 147.82 to 148.82 is 100 pips. Most brokers add a third decimal, which is the pipette.
How much is a pip worth on USD/JPY?
One pip on a standard lot is 1,000 yen, and its value in your account currency depends on the current rate: about $6.77 at 147.82. There is no fixed figure. Assuming $10 out of habit sizes a position roughly 48% larger than intended.
What is intervention risk?
Japan's Ministry of Finance has historically stepped into the market directly when the yen weakened quickly, producing sudden large moves with no scheduled announcement. Stops do not protect against a gap, and this is the major pair where such official action is most plausible.
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