What Is the U S. Dollar Index USDX and How to Trade It

The US Dollar Index (DXY) serves as a benchmark for measuring the relative value of the American dollar to a basket of currencies of the US’s key trading partners. The index’s value is indicative of the dollar’s value in global markets. In theory, the direction of the moving average (higher, lower or flat) indicates the trend of the market. Many trading systems utilize moving averages as independent variables and market analysts frequently use moving averages to confirm technical breakouts.

It is likely in the future that currencies such as the Chinese yuan (CNY) and Mexican peso (MXN) will supplant other currencies in the index due to China and Mexico being major trading partners with the U.S. The index is affected by macroeconomic factors, including inflation/deflation in the dollar and foreign currencies included in the comparable basket, as well as recessions and economic growth in those countries. The index started in 1973 with a base of 100, and values since then are relative to this base. It was established shortly after the Bretton Woods Agreement was dissolved. As part of the agreement, participating countries settled their balances in U.S. dollars (which was used as the reserve currency), while the USD was fully convertible to gold at a rate of $35/ounce.

1. If the index is rising, it means that the dollar is strengthening against the basket – and vice-versa.
2. Over the last few months especially, there’s been a lot of focus in the world of Currency Trading upon the state of the US Dollar.
3. Follow the rate of the US Dollar Index (DXY) in real-time at Capital.com to spot the best trading opportunities.
4. President Richard Nixon decided to temporarily suspend the gold standard, at which point other countries were able to choose any exchange agreement other than the price of gold.
5. Similarly, if the index is currently 80, falling 20 from its initial value, that implies that it has depreciated 20%.

The index is designed, calculated and published by the Intercontinental Exchange (ICE). Calculate your hypothetical P&L if you had opened a CFD trade on a certain date (select a date) and closed on a different date (select a date). Highlights important summary options statistics to provide a forward looking indication of investors’ sentiment. While some like to say they were surprised by what the US Fed did and said, the reality is there has been plenty of time to plan ahead based on previous comments. Federal Reserve’s meeting minutes are likely to show what the mood is like on the path of interest rates this year.

Trade US Dollar Index – DXY CFD

After probing under the psychological level, the index has recovered as… After trading below the 100 level in July and above 107 in October, the index has not moved much as stability returned to the dollar against… Recent trend suggests that bears are now in control after multiple https://traderoom.info/ buck-battering reports. Prices are expected to have increased by 3.4% in November according to the Fed’s preferred inflation gauge – the PCE print. The US labor market remained buoyant in December, adding more jobs than expected and throwing recent Fed projections into disarray.

After each calculation the program assigns a Buy, Sell, or Hold value with the study, depending on where the price lies in reference to the common interpretation of the study. For example, a price above its moving average is generally considered an upward trend or a buy. This fundamental information helps me understand what reports and indicators the economists of the world believe will shape future events.

What Does the Dollar Index Tell You?

At the end of 2019, the DXY traded at 96.5, meaning that the US dollar has slightly depreciated versus the basket of currencies since its establishment in 1973. High interest rates typically weigh on commodity prices as they increase the cost of carrying raw material inventories and increase production expenses. Gold price gathered bullish momentum and rose to its highest level since early January above $2,060. The benchmark 10-year US Treasury bond yield turned south and declined toward 3.8% after mixed US data, fueling XAU/USD’s rally.

Barchart Technical Opinion

These financial products currently trade on the New York Board of Trade. Investors can use the index to hedge general currency moves or speculate. The index is also available indirectly as part of exchange-traded funds (ETFs) or mutual funds. The USDX uses a fixed weighting what is the difference between data and information? scheme based on exchange rates in 1973 that heavily weights the euro. As a result, expect to see big moves in the fund in response to euro movements. The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to a basket of foreign currencies.

The dollar index powered higher earlier today as quiet trading has lifted the dollar’s value by 1.5% in seven days. The euro is, by far, the largest component of the index, making up 57.6% of the basket. The weights of the rest of the currencies in the index are JPY (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%), and CHF (3.6%). Always stay on top of the latest price developments with our DXY live chart.

Since I wrote my last analysis, I find that despite the surging hopes for a rate cut of 25 basis points by the Fed in its meeting on Jan.30-31, gold futures continued to witness… Investing.com– Most Asian currencies retreated on Thursday, while the dollar hovered near a seven-week high after the Federal Reserve kept interest rates steady and shot down… The US Dollar Index was introduced by the US Federal Reserve in 1973 after the dismantling of the Bretton Woods Agreement. The constituents of the foreign currency basket were altered only once when several European currencies were subsumed by the euro in early 1999.

Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. Information presented by DailyFX Limited should be construed as market commentary, merely observing economical, political and market conditions.

ICE provides live feeds for Dow Futures that appear on Bloomberg.com and CNN Money. Dollar markets are open, which is from Sunday evening New York City local time (early Monday morning Asia time) for 24 hours a day to late Friday afternoon New York City local time. Over the last few months especially, there’s been a lot of focus in the world of Currency Trading upon the state of the US Dollar. No matter what your opinion is of the Greenback, it is still, without question, regarded as the world’s primary reserve currency and holds its weight of recognition across the board. By Karen Brettell NEW YORK (Reuters) -The dollar fell against the euro and yen on Thursday as investors continued to bet the Federal Reserve is closer to cutting interest rates,…

As our members know, ($DXY) has recently given us correction against the… Silver futures have looked like they will explode higher on rallies, but corrections make them appear to fall into a bearish abyss. Over the past six months, selling silver when it looks the best and buying… Gold made an ominous bearish technical pattern when it made a double-top, reaching $2,072 per ounce in March 2022 and May 2023. Since the latest peak, the price action turned bearish, with the precious… The bearish trend in the U.S. dollar index took it from a twenty-year high in September 2022 to below the 100 level in July 2023.