what is the us dollar index?
The US Dollar Index (USDX) is a measure of the value of the United States Dollar (us currency) relative to a basket of foreign currencies. It is a mean value of rate fluctuation of USD compared with the six major world currencies JPY, EUR, GBP, CAD, CHF and SEK.
USDX is calculated by factoring in the forex foreign exchange rates of the six major world currencies: the Euro, Japanese Yen, Canadian Dollar, British Pound, Swedish Krona and Swiss Franc. The USDX was started in March 1973 (after the introduction of floating exchange rates system, what is known as the Forex trading market now) us dollar index quote has a base of 100. This index is used by online forex traders in technical analysis of foreign exchange trading.
The base was the starting point/reference point for calculation of the US index. The value of the USD is relative to this base.
USDX is also used by the US Federal Reserve System to calculate the trade and weighted dollar index. The weighted US dollar index is calculated in regards to the forex exchange currencies of countries that form US foreign international trade turnover. These countries are European Union 57.6%, Japan 13.6%, Great Britain 11.9%, Canada 9.1%, Sweden 4.2% and Switzerland 3.6%.
Therefore Index is a weighted mean of the US Dollar value compared with:
Euro Zone, EUR - 57.6%
Japan, JPY - 13.6%
Great Britain, GBP -11.9%
Canadian, CAD - 9.1%
Swedish, SEK - 4.2%
Swiss, CHF - 3.6%
usdx value chart USDX dollar index calculation
US Dollar Index Basket of Weighted Currencies
Learn Forex Technical Analysis of USDX -When the USDX goes higher the US dollar gains more value compared to other Forex currencies. If the it goes up to 110 the value of USD Forex rates would have increased by 10 %, if it went down to 90 then the value of USD currency rates would have decreased by 10 %. In the foreign exchange market, the highest level it has ever reached is 160 and the lowest level was 78.
USDX is updated whenever US markets are open, which is from Sunday evening New York time to Friday afternoon New York time. The US Dollar Index is continuously calculated and is based upon the information about operations in the currency markets.
US dollar index Chart is one of the Forex trading instruments used by traders to forecast exchange rates/fx rates of other currency pairs in comparison to the US dollar.
In the stock market, the stock index(Dow Jones Index, NASDAQ Composite, S&P) is used to show the general condition of the stock market. In the forex market, the USDX is used to show the general trend of the foreign exchange rates.
USDX FORMULA - us dollar chartsUS dollar charts are Calculated using the formula below
USDX=EUR * 0.576 x JPY * 0.136 x GBP * 0.119 x CAD * 0.091 x SEK * 0.042 x CHF * 0.036
It is then plotted on a chart and Forex traders use this chart of Dollar Index as an indicator for the trading direction of the USD Currency.
When the USDX goes down it means exchange traders are selling the USD Currency.
When the USDX goes up it means exchange traders are buying the USD Currency.
USDX Chart - currency exchange rate
The Picture Image below shows a Dollar Index Chart, it is drawn the same way as the other forex exchange rate charts.
USDX Live chart of the us dollar index
USDX Inverse Correlation to the EURUSDThe chart of us dollar Index is inversely correlated to EURUSD, meaning the two of them will give opposite trading signals move in the opposite directions, when one moves up the the moves down and vice versa. The examples below shows both the USDX Chart and EUR USD forex quotes Chart.
EURUSD Forex Trading Exchange Rate Chart
USDX compared with the EURUSD chart The chart below shows a USDX Index Chart Super-imposed on a EURUSD Forex Chart. From the example of EURUSD with USDX currency chart you can see the inverse/reverse correlation of the USDX index to that of the EURUSD. The forex trading signals generated are the exact opposite of one another. In technical analysis and online currency trading USDX index chart is used to determine the direction of the euro exchange rate chart using this inverse correlation.
USDX US Dollar Index and EURUSD
USDX dollar index chart compared with EURUSD charts - USDX Historical Chart
Where Can A Trader Find these USDX Charts Online? At www.timingcharts.com is where you will find the Online USDX Historical chart