The DXY (Dollar Index) and Its Influence on Forex Pairs
The US Dollar Index (DXY) is one of the most important instruments for forex traders. It measures the value of the US dollar against a basket of six other currencies.
What is the DXY?
The DXY was created in 1973. It measures USD value against:
- Euro (EUR) - 57.6%
- Japanese Yen (JPY) - 13.6%
- British Pound (GBP) - 11.9%
- Canadian Dollar (CAD) - 9.1%
- Swedish Krona (SEK) - 4.2%
- Swiss Franc (CHF) - 3.6%
Why is the DXY Important?
1. Dollar Strength Indicator
2. Inverse Correlation with Most Forex Pairs
3. Commodity Prices
4. Economic Indicator
How to Use the DXY
Strategy 1: Trend Confirmation
Strategy 2: Divergence
Strategy 3: Support and Resistance
Strategy 4: Breakout
Conclusion
The DXY is one of the most important instruments for forex traders. It gives you a quick overview of dollar strength and helps you predict the direction of USD pairs.
