What is the Dollar Index (DXY/USDX)?

The dollar index is an indicator that shows the strength or weakness of the US dollar. It has a huge impact on markets around the world, as it is linked to the most important currencies in the world of trade. It has been in existence since 1973 and has influenced market trends ever since.

 

What is the difference between USDX and DXY?

In fact, none, because they are simply different names for the dollar index. They are synonyms, with no important component hidden in either name, but the first name is used more often.

What currencies is the dollar index linked to?

The USDX basket of currencies features 6 major currencies, that is, the euro, the Japanese yen, the British pound, the Canadian dollar, the Swiss franc and the Swedish krona. The basket used to consist of 10 currencies, but when the euro was created, there was an automatic change. In the index, the euro is the highest rated and accounts for 57% of the index, followed by the Japanese yen and its 13% share and the British pound with 11% percent, the next 3 currencies account for about 17% of the index.

What is currency pegging?

The index shows what effect the USD, as the base currency, has on other currencies. So if the U.S. dollar is in a downward trend, the same situation can be observed for other currencies. It works the same way in the other direction, that is, when the dollar rises, the index and individual currencies, also follow the same path.

Is the USDX reflected only in currencies?

Most commodities, and especially the most important ones, are priced in the US dollar. That’s why when the USDX shows an upward trend, commodity prices also rise and a sudden sell-off can be seen, while when the USDX is on an upward trend, the situation is reversed.

Is the USDX worth watching?

Since this index reflects the state of the U.S. dollar, it is worth paying some attention to it, as it is already a certain part of the basis for predicting future market situations.