As far as trading pairs for professional traders go, USD/JPY is one of the elites. It’s one of the relatively stable, go-to trading pairs that consistently posts the second-highest trading volumes behind EUR/USD. From October 2024 to April 2025, the survey period of the Federal Reserve Bank of New York, USD/JPY saw a $75.3 billion increase in trading volume.
It was already popular, but lately increased demand and a moderately strong inverse relationship with market pricing after the Fed funds rate out to September 2026 last week, the relationship of USD to Yen seems to be getting stronger.
Below, we’ll explore why the trading pair is becoming more popular amongst professional traders and what’s likely to influence it going into 2026.
The USD/JPY Trading Pair Explained
The Exness USDJPY live chart for example, of the currency pair, represents the exchange rate between the United States dollar (USD) and the Japanese yen (JPY). It indicates how many yen are needed to purchase one US dollar. This pair is one of the most liquid and frequently traded forex pairs worldwide. It’s no surprise considering the size and influence of the two economies behind it.
The USD and JPY combined make up roughly 66% of global official foreign exchange reserves, and their importance in international finance is undeniable.
Both the dollar and yen are also considered safe-haven currencies. As a result, USD/JPY often becomes a barometer of market sentiment. When global risk appetite is strong, the dollar may rise against the yen; in risk-off episodes, the yen (funded by Japan’s net foreign assets) tends to strengthen due to repatriation flows, driving USD/JPY lower.
USD/JPY is also a major pair with tight bid-ask spreads and deep liquidity, making it accessible and cost-efficient to trade even at large volumes. By understanding the fundamental drivers – from interest rate policies of the Federal Reserve and Bank of Japan (BoJ) to trade balances and safe-haven flows – traders can better anticipate moves in this highly influential exchange rate.
What’s Influencing The Growing Popularity?
Over the last 12 months from Q4 2024 through 2025, several factors have created a surge in USD/JPY’s popularity among professional traders.
The interest rate divergence between the US and Japan is definitely a big reason. The US Federal Reserve’s aggressive rate hikes in 2022–2023 pushed US rates above 5%. The BoJ kept its policy near 0%. Although that era has ended for Japan after the Bank of Japan ended a decade-long interest-free interest rate dominance, they’ve only increased it to a small 0.5% compared to the US’s most recently recorded 4.25.
This large yield differential revitalized the classic “yen carry trade.” It’s so easy to borrow yen at ultra-low cost to invest in higher-yield USD assets. With that, it’s a staple strategy for global investors.
At the start of 2024, the US–Japan interest rate gap was around 4–4.5%, providing more than enough carry yield. This much of a wide spread encouraged massive short-yen positions (long USD/JPY), dramatically increasing trading activity in the pair.
By April 2025, USD/JPY trading in North America had grown by about $65.4 billion in average daily volume year-on-year – one of the largest jumps among currency pairs. Preliminary survey results show USD/JPY was the only one of the top six currency pairs to increase its global volume share in the latest BIS study, rising to more than 14.3% of total forex turnover.
Why The USD/JPY Trading Pair Suits Professional Traders
Seasoned forex traders often favor USD/JPY because its characteristics align well with professional trading requirements.
We have to start with the pair’s exceptional liquidity. USD/JPY sees enormous daily turnover in global markets, more than $1 trillion daily averages. Even large institutional orders can be executed with minimal slippage. This high liquidity leads to tight spreads and low transaction costs. It’s a critical advantage for professionals managing sizable positions or frequently trading in and out. And even with that, professional traders apply trading discipline rules, as explained by Exness, to keep those sizable positions.
USD/JPY is also heavily driven by fundamental factors that professionals specialize in analyzing. The pair is highly sensitive to economic data releases and policy signals from the Fed and BoJ. Sophisticated traders can use their research on interest rate expectations, inflation trends, and central bank guidance to anticipate USD/JPY moves.
The dollar-yen is also influenced by macro themes such as trade policy and risk sentiment, which professionals monitor closely. That means skilled macro traders often find USD/JPY massively rewarding. Their insights into monetary policy divergence or safe-haven flows can be directly translated into trades.
And the interest rate differential itself provides an advantage. Going long USD/JPY (long USD, short yen) is a more positive carry – essentially earning interest daily due to higher US rates. Institutional investors frequently exploit this by funding positions in low-yield yen and investing in USD. It’s so easy to capture the rate spread as profit.
Has The USD/JPY Trading Pair Always Been Popular?
Yes. The USD/JPY trading pair has long been the second most-popular currency pair in the forex market.
During the Bretton Woods era and after the yen’s float in 1973, the dollar-yen market rapidly grew in depth. By modern measures, it has consistently ranked near the top of global forex turnover. This enduring popularity is also evident in regional markets. In Japan’s own forex market, USD/JPY has always been the most dominant pair.
Even as of late 2023, over 62% of Japanese forex turnover was concentrated in USD/JPY trades. That outright dwarfed other pairs like EUR/USD or EUR/JPY.
Historically, USD/JPY’s popularity has seen cycles tied to economic eras. In the late 1980s and 1990s, the pair was in focus during events such as the Plaza Accord (1985) and the yen’s subsequent surge.
Then it was the BoJ’s interventions during the “Lost Decade” of deflation. The Bank of Japan’s massive forex interventions in 2003–2004 (over $300 billion selling yen) underscored how pivotal USD/JPY was to Japan’s economic strategy and to traders globally at that time.
However, whenever macro differentials widen or global crises happen, USD/JPY comes back into the spotlight. The post-2022 period is a prime example. US inflation spiked massively after the COVID-19 pandemic, and rates rose while Japan stuck to ultra-easy policy. The USD/JPY spiked to its highest levels since the 1990s (e.g. ¥151.94 in Oct 2022), and traders worldwide got excited.
Industry Experts Suggest Steady Growth
Market analysts and industry experts generally anticipate that USD/JPY will continue to see strong activity and a bias toward further dollar strength against the yen.
In terms of trading interest, the consensus is that as long as US–Japan yield differentials remain meaningful, the pair will stay heavily traded. Forex industry experts note that even after some volatility, the USD/JPY’s share of global forex trading reached multi-year highs by 2025: a trend expected to persist.
Strategists also note that any Bank of Japan policy normalization (which could strengthen the yen) is likely to be gradual. The steady growth in USD/JPY’s prominence and volume may well continue.
When it comes to price forecasts, many experts predict a relatively stable or gently rising USD/JPY rate over the coming quarters, rather than a sharp reversal. For example, economists at Wells Fargo, in their international outlook, project USD/JPY trading around an average of ¥148 in Q4 2025 and climbing toward ¥151 by late 2026.
This view of moderate but steady upside suggests confidence that the dollar will remain strong versus the yen, supported by factors such as Japan’s modest tightening pace and the Fed’s higher base rates.
The USD/JPY pair will continue to generate interest from professional traders that like volatility with stability. Yes, sometimes those go in the same sentence. The pairing has and always will be one of the most popular on the market.
