US Dollar Index DXY Forecast, News and Analysis

The U.S. Dollar Index (USDX) is a relative measure of the U.S. dollars (USD) strength against a basket of six influential currencies, including the Euro, Pound, Yen, Canadian Dollar, Swedish Korner, and Swiss Franc. The USDX can be used as a proxy for the health of the U.S. economy and traders can use it to speculate on the dollar’s change in value or as a hedge against currency exposure elsewhere. An overvaluation of the USD led to concerns over the exchange rates and their link to the way in which gold was priced. 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.

Gold price drops as US Dollar rebounds after hot US core PCE Inflation data

DailyFX Limited is not responsible for any trading decisions taken by persons not intended to view this material. The US Dollar Index, also known as DXY, is used by traders seeking a measure of the value of USD against a basket of currencies used by US trade partners. The index will rise if the Dollar strengthens against these currencies and will fall if the Dollar weakens against these currencies. Plan your technical analysis of the US Dollar Index by tracking its price in the chart and keep up with the latest market movements with news, advice pieces, and the dollar index forecast.

How to Trade the USDX

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%).

Latest US Dollar Index Analysis

1. Investors can use the index to hedge general currency moves or speculate.
2. Similarly, if the index is currently 80, falling 20 from its initial value, that implies that it has depreciated 20%.
3. The U.S. dollar index allows traders to monitor the value of the USD compared to a basket of select currencies in a single transaction.
4. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances.
5. The USDX can be used as a proxy for the health of the U.S. economy and traders can use it to speculate on the dollar’s change in value or as a hedge against currency exposure elsewhere.

The WTI price depreciates on a weaker demand outlook following US GDP data released on Thursday. US Treasury Secretary Janet Yellen said that US GDP growth for Q1 could be revised higher as more data becomes available. Israel intensifies air strikes on Rafah, disregarding cautions from allies regarding the risk of significant civilian casualties. Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses. ICE provides live feeds for Dow Futures that appear on Bloomberg.com and CNN Money.

A Look at the US Dollar Index

This fundamental information helps me understand what reports and indicators the economists of the world believe will shape future events. For instance, the Invesco DB U.S. Dollar Index Bullish Fund (UUP) is an ETF that tracks the changes in value of the US dollar via USDX future contracts. The Wisdom Tree Bloomberg U.S. Dollar Bullish Fund (USDU) is an actively-managed ETF that goes long the U.S. dollar against a basket of developed and emerging market currencies.

The index is also available indirectly as part of exchange-traded funds (ETFs) or mutual funds. The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to a basket of foreign currencies. Federal Reserve in 1973 after the dissolution velocity trade of the Bretton Woods Agreement. It is now maintained by ICE Data Indices, a subsidiary of the Intercontinental Exchange (ICE). In the coming years, it is likely currencies will be replaced as the index strives to represent major U.S. trading partners.

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.

The USDX uses a fixed weighting 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 dollar index tracks the relative value of the U.S. dollar against a basket of important world currencies. If the index is rising, it means that the dollar is strengthening https://forexbroker-listing.com/ against the basket – and vice-versa. 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.

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. The U.S. Dollar Index has risen and fallen sharply throughout its history. Over the last several years, the U.S. dollar index has been relatively rangebound between 90 and 110.

The USDX is based on a basket of six currencies with different weightings (see above). The index calculation is simply the weighted average of the U.S. dollar exchange rates against these currencies, normalized by an indexing factor (which is ~50.1435). Investors can use the index to hedge general currency moves or speculate.

Traders are having it difficult to value the next directional move for the US Dollar. The US Dollar Index tests the downtrend pattern and could snap it should PCE overshoot expectations. Similarly, if the index is currently 80, falling 20 from its initial value, that implies that it has depreciated 20%. The appreciation and depreciation results are a factor of the time period in question.

In 1973, many foreign governments chose to let their currency rates float, putting an end to the agreement. The U.S. dollar index allows traders to monitor the value of the USD compared to a basket of select currencies in a single transaction. It also allows them to hedge their bets against any risks with respect to the dollar.

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. It is not a solicitation or a recommendation to trade derivatives contracts or securities and should not be construed or interpreted as financial advice. Any examples given are provided for illustrative purposes only and no representation is being made that any person will, or is likely to, achieve profits or losses similar to those examples.

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. An index value of 120 suggests that the U.S. dollar has appreciated 20% versus the basket of currencies over the time period in question. Simply put, https://forex-reviews.org/trading-with-plus500/ if the USDX goes up, that means the U.S. dollar is gaining strength or value when compared to the other currencies. The contents of the basket of currencies have only been changed once since the index started when the euro replaced many European currencies previously in the index in 1999, such as Germany’s predecessor currency, the Deutschemark.