Category: 1. The U.S. Dollar Index

Ever wonder why the U.S. dollar strengthens both in times of tough luck and when the economy is booming like a Taylor Swift single? Currencies tend to fall when their country’s domestic economic outlook worsens, but the U.S. dollar’s unique global role makes it special so when the U.S. economy isn’t doing great, the currency may still… Continue reading The Dollar Smile Theory

The Bloomberg Dollar Spot Index (BBDXY) tracks the performance of a basket of 10 global currencies against the U.S. dollar. Its composition is updated annually and represents a diverse set of currencies that are important from a global trade and liquidity perspective. Since other dollar indices (ahem…DXY) do not update their composition and are comprised of only… Continue reading Bloomberg Dollar Spot Index

There is also another kind of U.S. dollar index. It was created by the Federal Reserve and is now used widely by lots of sexy people, like economists and currency analysts. It is called the “Trade Weighted U.S. Dollar Index“. You can find it on the Federal Reserve Economic Data (FRED) website here. Their website is probably one… Continue reading Trade Weighted Dollar Index

I bet you’re wondering, “How do I use this USDX in my trading arsenal?” Well, hold your trigger finger and you’ll soon find out! We all know that most of the widely traded currency pairs include the U.S. dollar. If you don’t know, some that include the U.S. dollar are EUR/USD, GBP/USD, USD/CHF, USD/JPY, and USD/CAD. What does this mean? If… Continue reading How to Use the USDX for Forex Trading

Just like any currency pair, the US Dollar Index (USDX) even has its own chart. Holler at the U.S. Dollar Index: First, notice that the index is calculated 24 hours a day, five days a week. Also, the US Dollar Index (USDX) measures the dollar’s general value relative to a base of 100.000. Huh?!? Okay. For example,… Continue reading How to Read the US Dollar Index

If you’ve traded stocks, you’re probably familiar with all the indices available such as the Dow Jones Industrial Average (DJIA), NASDAQ Composite Index, Russell 2000, S&P 500, Wilshire 5000, and the Nimbus 2001. Oh wait, that last one is actually Harry Potter’s broomstick. Well if U.S. stocks have an index, the U.S. dollar can’t be… Continue reading What is the US Dollar Index (USDX)?