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 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). 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. It is possible to incorporate futures or options strategies on the USDX.
USD BULLISH THEMES
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. 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. Supply and demand for currencies is heavily influenced by the monetary policies – particularly the interest rates – set by the central bank in each country.
EUR/USD rises toward 1.0850 after EU inflation data
However, such a strong Dollar caused problems for US exporters, who found that their goods were no longer as competitive internationally. As a result, the US government took action to make the currency more competitive with five countries agreeing to manipulate the Dollar in the forex markets as part of the ‘Plaza Accord’. The US Dollar Index was started by the Federal Reserve in 1973 and has been managed by ICE Futures US since 1985. It compares the value of the US Dollar against six currencies used by major US trade partners – the Euro (EUR), Japanese Yen (JPY), Pound Sterling (GBP), Canadian Dollar (CAD), Swedish Krona (SEK) and Swiss Franc (CHF). Traders can also use leveraged currency ETFs to bet against weakening international currencies.
DXY Technical Overview
Dollar Index (USDX), which helps investors understand the relative strength of the dollar. This key index helps them see how the dollar’s value impacts consumer prices, demand for imports and exports, and the condition of the economy as a whole. 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.
US Dollar Index (DXY) Price Value Chart Today
New delayed trade updates are updated on the page as indicated by a “flash”. Gold rose to a new all-time peak, and silver almost reached $30 in April before the leading precious metals corrected. The decline from the recent highs could be another golden opportunity for traders… UBS expressed caution regarding the New Zealand dollar (NZD), citing a challenging economic outlook and potential for underperformance against other major currencies.The NZD/USD… Before the Euro, the index also included five other European currencies.
- The higher interest rates rise, the more demand there is for U.S. dollars from foreign investors, and that applies further upward pressure on the USDX.
- “The weightings of the currencies used to calculate the index were based on the United States’ biggest trading partners in the 1970s,” Rogovy says.
- The appreciation and depreciation results are a factor of the time period in question.
- The U.S. Dollar Index is a market index benchmark used to measure the value of the U.S. dollar relative to other widely-traded international currencies.
The ProShares UltraShort Euro (EUO) is designed to generate daily returns equal to double the inverse of the daily performance of the euro versus the U.S. dollar. The higher interest rates rise, the more demand there is for U.S. dollars from foreign investors, and that applies further upward pressure on the USDX. The Fed’s top priority in 2022 has been bringing down inflation from multi-decade highs, and its best weapon has been raising interest rates.
DOLLAR INDEX, USDX
At the same time, Russia’s invasion of Ukraine has created economic uncertainty around the world, particularly in the European energy market. Because the U.S. dollar is the world’s reserve currency and is generally considered https://www.broker-review.org/ a safe haven during periods of economic instability, investors have also been piling into the dollar for safety and security. The Federal Reserve established the dollar index in 1973 to track the value of the U.S. dollar.
The more goods the U.S. exports, the more international demand there is for U.S. dollars to purchase those goods. The Barchart Technical Opinion widget shows you today’s overally Barchart Opinion with general information on how to interpret the short and longer term signals. Unique to Barchart.com, Opinions analyzes a stock or commodity using 13 popular analytics in short-, medium- and long-term periods. Results are interpreted as buy, sell or hold signals, each with numeric ratings and summarized with an overall percentage buy or sell rating. 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.
Other factors include inflation, economic performance, credit ratings, market sentiment and foreign affairs. The US Dollar Index – known as USDX, DXY, DX and USD Index – is a measure of the value of the United States Dollar (USD) against a weighted basket of currencies used by US trade partners. The index will rise if the Dollar strengthens against these currencies and fall if it weakens. Keep reading to learn more on the US Dollar Index, how it is calculated, and what affects it price.
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. New Highs/Lows only includes stocks traded on NYSE, NYSE Arca, Nasdaq or OTC-US exchanges with over 5 days of prices, with a last price above $0.25 and below $10,000, and with volume greater than 1000 shares. 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.
Goldman Sachs estimates S&P 500 companies generate about 29% of their total revenue from outside the U.S. Not surprisingly, analysts have tamped down S&P 500 revenue growth estimates for 2023. According to Yardeni Research, the consensus estimate for the fourth quarter is +9%.
Simply put, if the USDX goes up, that means the U.S. dollar is gaining strength or value when compared to the other currencies. Since then, the US Dollar Index has tracked economic performance and liquidity flows. Tech stocks have the largest overall exposure to international markets of any S&P 500 market sector, with overseas revenue representing 59% of total sales, according to Goldman. “The weightings of the currencies used to calculate the index were based on the United States’ biggest trading partners in the 1970s,” Rogovy says.
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. In 1973, many foreign governments chose to let their currency rates float, putting an end to the agreement. 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.
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 questrade review (USDU) is an actively-managed ETF that goes long the U.S. dollar against a basket of developed and emerging market currencies. These financial products currently trade on the New York Board of Trade.
The New Highs/Lows widget provides a snapshot of US stocks that have made or matched a new high or low price for a specific time period. Stocks must have traded for the specified time period in order to be considered as a new High or Low. The gold bull market continued to take the leading precious metal to new record highs in late 2023. In early 2024, gold prices have pulled back from the highs but remain above the $2,000 level. 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 against the basket – and vice-versa.
Two years earlier, President Richard Nixon had abandoned the gold standard, which allowed the value of the dollar to float freely in foreign exchange (forex) markets. The U.S. Dollar Index is a market index benchmark used to measure the value of the U.S. dollar relative to other widely-traded international currencies. This fundamental information helps me understand what reports and indicators the economists of the world believe will shape future events. This is to be expected since the average includes data from the previous, lower priced days. As long as prices remain above the average there is strength in the market.
Check out the latest USD Index price with our chart and follow the latest news and analysis from our DailyFX experts. The below chart shows some of the major events that affected the USDX price since 2005. Here we can see that USD is the base currency in four of the six currency pairs included, with these given a positive value for the purposes of the calculation. The Euro and Pound are the base currency for the two others, with these given a negative value. Traders should make sure they fully understand how these derivative contracts work and the risks involved before they buy.
While the $2,000 level was a technical resistance level over the past years, it has become technical… US Q1 GDP was revised downward to +1.3% (q/q annualized) from +1.6%, right on expectations. The Q1 core PCE price index was unexpectedly revised lower to +3.6% (q/q annualized), weaker than expectations of no change at +3.7%. Today’s PCE Data May Define the Gold TrendGold (XAU) has been moving sideways within 2,325–2,363 throughout the week, awaiting today’s US Personal Consumption Expenditure (PCE)…