What is Dollar index?


The dollar index, also known as the DXY, is a measure of the value of the U.S. dollar relative to a basket of six other major world currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc.


The DXY is calculated by taking an average of exchange rates for these currencies against the U.S. dollar, and weighting the averages based on each currency's significance in international trade. The euro, for example, has a higher weighting than the Swedish krona, because it is used more widely in international transactions.


The dollar index is a widely-used benchmark for the value of the U.S. dollar, both in financial markets and in international trade. It is used by investors to gauge the strength of the U.S. economy and to make investment decisions based on how the dollar is likely to perform against other currencies. It is also used by government officials in making monetary policy decisions, and by companies in setting prices for their goods and services.


The USD Index is traded on several exchanges and is also used as a benchmark in financial derivative products, such as futures contracts and options.

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