Nick Goold
Tokyo Forex Trading Session: Best Pairs and Strategies
The Tokyo trading session is one of the three major forex market sessions, alongside London and New York. Although it is generally quieter, it still plays a crucial role in global forex activity. The Tokyo session usually runs from 8 am to 4 pm Japan Standard Time (JST). After Tokyo closes, the London session becomes the primary driver of forex markets.
Compared to London and New York, the Tokyo session has lower average volatility. This makes pair selection extremely important for traders, as not all markets show strong moves. In some cases, the best trading decision is to wait until London opens rather than forcing a trade in a quiet Tokyo market.
Best Forex Pairs to Trade in the Tokyo Session
Below are the four most popular forex pairs during the Tokyo trading session, ranked from best to worst in terms of opportunity.
1. USD/JPY
The USD/JPY is the most active and liquid pair in the Tokyo session, offering tight spreads and high trading volume. The pair is especially active around 9 am JST, when Japanese equity markets open.
The Bank of Japan’s monetary policy decisions have the biggest impact on USD/JPY. Regular Japanese economic data usually has less influence, but overnight moves in the London and New York markets often drive reactions during Tokyo hours. Monitoring how USD/JPY responds to overnight moves can reveal profitable opportunities.
2. AUD/JPY
The AUD/JPY is the second-best pair to trade during Tokyo hours, as both the Japanese and Australian markets are active. The pair is influenced by commodity prices and policy announcements from the Reserve Bank of Australia (RBA), which often cause strong volatility.
With recent Australian interest rate increases, the carry trade (selling JPY to buy AUD) has regained popularity. Breakouts from long-term ranges can spark volatility as institutional carry trade orders enter the market, offering opportunities for both short- and long-term traders.
3. GBP/JPY
The GBP/JPY tends to have wider spreads during Tokyo hours and often lacks UK news catalysts, making it less attractive for day traders. However, swing traders may find occasional moves against the broader trend that can align with medium-term opportunities.
GBP/JPY typically offers more activity and narrower spreads during the London session. Still, traders should monitor Tokyo developments, as they can influence price action once London opens.
4. EUR/JPY
The EUR/JPY can attract some interest during Tokyo hours but usually lacks volatility. Because EUR/USD is quiet during Tokyo, EUR/JPY often mirrors USD/JPY moves. Occasionally, large institutional orders in EUR/USD during Tokyo can cause sudden spikes in EUR/JPY, often creating short-term reversal setups.
Key Takeaways for Trading the Tokyo Session
- The Tokyo session is quieter than London and New York but offers reliable opportunities in USD/JPY and AUD/JPY.
- Carry trades and commodity-linked moves often make AUD/JPY particularly attractive.
- GBP/JPY and EUR/JPY are less active but can present opportunities when Tokyo moves affect London’s open.
- Patience is critical—sometimes the best Tokyo session trade is to wait for London.
By specializing in the Tokyo session and understanding its patterns, traders can still find consistent opportunities, even in a lower-volatility environment.
