The Dollar Index
The Dollar Index (USDX or DXY) is an index that measures and reflects the strength or the weakness of the USD, learn what it is and how to trade it here…
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The Currency Basket
The largest component of the index is the Eur (EUR) which makes up 57.6% of the weighting.
Second largest is the Japanese Yen (JPY) at 13.6% followed by the Great British Pound (GBP) at 11.9%.
The Canadian dollar (CAD) weighs in at 9.1% with the Swedish Krona (SEK) and the Swiss Franc (CHF) making up the remainder at 4.2% and 3.6% respectively.
This is the index and it’s weightings as of 2014.
The index was actually born in March 1973 and was set at 100. Since then, it has seen a High of around 150 in February 1985 and a Low of around 70 in March 2008.
When the index rises it indicates US Dollar strength and. when it falls it indicates US Dollar weakness.
How To Trade It
You can actually trade this instrument just like any other instrument. This assumes your broker supports it. Either call them or look for the symbol USDX or DXY.
Now you know what the US Dollar Index is and how to trade it!
Back To The Start
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