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US Dollar Index

The US Dollar Index (USDX) was founded in 1973, replacing the Bretton Woods system that was in use previously. This index is an extremely popular instrument that is used for trading and forecasting some currency pairs’ expected movement.

While stock indices are predominantly used to evaluate the state of the stock market, the USDX measures the international strength of the American dollar. You can find information about the US Dollar Index online quite easily. Changes in the USDX result from the trading activity on the forex market.

The USDX measures the correlation between the American dollar and six other major currencies - the euro, the Japanese yen, the British pound sterling, the Canadian dollar, the Swiss franc, and the Swedish krona.

Whether or not you use Expert Advisors (EAs) in your trading, you need to remember that the Us Dollar Index is very important and will have an impact on most currency pairs (even if they do not include the dollar itself; indeed, sometimes the USDX can be relevant even to commodities such as oil). Most commonly, the US Dollar Index is useful for gauging the strength of the USD, but it also has an impact on the Forex market as a whole.

By looking at the USDX alongside candlesticks, moving averages, and support and resistance levels, traders can measure the strength of the US dollar, the possible future movements of rates involving it (even long-term trends), and the general feeling of the participants in the Forex market. These are the kinds of things you need to know if you want to make successful deals.

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