What is the US Dollar index (DXY)?
- The US dollar index, also known as the USD Index (with tickers USDIDX, USDX or DXY), is a measure of the US dollar’s value relative to a basket of other foreign currencies
- It gauges the strength or weakness of the dollar for international trade purposes
- For this reason, it is known as a ‘trade-weighted’ index
- The index DXY was introduced by the US Federal Reserve in 1973 after the Bretton Woods Agreement ended
- It was developed to provide an external bilateral trade-weighted average value of the US dollar against other currencies
- DXY is often cited in discussions of US monetary policy and global economic health
- In addition, it is widely used by forex traders to assess the dollar’s performance against other currencies
- If the US dollar index goes up, it means the US dollar is gaining value when compared to other currencies
- It’s also used as a proxy for the health of the US economy, and can be used as a hedge against other currency transactions
What does the US Dollar index consist of?
The index tracks the US dollar against six other major currencies.
Each other currency’s value is ‘weighted,’ which means the significance of each currency in the index is not equal.
Weighting is used to account for the different levels of trade activity between the US and its trading partners.
This ensures the index better represents the actual economic impact of currency movements on the US economy.
The weight of each currency is meant to accurately reflect its importance in US trade. For example, the euro has the largest weight, making up 57.6% of the index, because the Eurozone is a major trading partner of the United States.
However, the weighting has only been changed once since 1973, so it is now considered out-of-date. It no longer accurately reflects the significance of actual US trading partners today.
For example, China and Mexico are now significant trading partners of the US, but their currencies are not represented in the index.
What currencies are used to calculate the US Dollar index DXY?
Currency and weight (correct as of January 2025)
Euro (EUR) – 57.6% weight
Japanese yen (JPY) – 13.6% weight
Pound sterling (GBP) – 11.9% weight
Canadian dollar (CAD) – 9.1% weight
Swedish krona (SEK) – 4.2% weight
Swiss franc (CHF) – 3.6% weight
The euro has the largest weighting in the basket.
It was introduced into the index in 1999 when the euro replaced many other European currencies, such as Germany’s deutschemark.
In the future, expect to see other currencies such as the Chinese yuan (CNY) and Mexican peso (MXN) replace some other currencies in this index.
What is the history of the value of DXY?
- When the US Dollar Index (DXY) was introduced in 1973, it had a base value of 100
- This followed the end of the Bretton Woods Agreement, which decoupled the US dollar from the gold standard
- Since that time, it has ranged from a low of around 70 during the Global Financial Crisis of 2007/2008, to a high of 164, which it reached in 1985
Key historic moments for the US dollar index DXY
- 1985 high: The USDX reached its all-time high of 164.72 in February 1985. This surge reflected the strength of the United States’ economy and tight monetary policy at the time, making the dollar more attractive. However, this level of appreciation made US exports expensive, contributing to global trade imbalances.
- 2008 low: In March 2008, the USDX hit its record low of 70.698 during the global financial crisis. Widespread economic instability, coupled with aggressive Federal Reserve policies (such as interest rate cuts and quantitative easing), led to a weakening dollar as investors sought safer assets like gold.
- Post-2008 recovery: After the financial crisis, the USDX gradually recovered, largely due to the relative strength of the US economy compared to other global economies, particularly those in Europe.
- Covid pandemic period: In 2020, amid the COVID-19 pandemic, the USDX saw increased volatility. Early in the pandemic, it spiked as investors rushed to the dollar as a safe-haven asset. However, later in 2020, it declined as the US Federal Reserve implemented aggressive monetary easing policies.
- 2022 high: In September 2022, the USDX climbed above 114, due to rising interest rates by the Federal Reserve, and geopolitical tensions, including the war in Ukraine. The high rates and uncertainty made the dollar stronger relative to other major currencies.
Current value of the US Dollar index (USDX or DXY)
From January 2023 to October 2024, DXY ranged from around 95 to 108, exhibiting long trends within a tight price range. It is considered a relatively stable index.
However, since the election of President Donald Trump in November 2024, the DXY has sharply increased in value, from around 100 in early November to a high of nearly 110 in January 2025.
How to interpret the value of the DXY Dollar index
- Highs and lows: DXY reflects investor confidence in the US economy. Higher values indicate greater demand for the dollar as a reserve currency or as a safe-haven asset, while lower values suggest weakening confidence or economic conditions
- Above 100: When the index is above 100, it means the dollar is stronger than its initial 1973 value. A higher DXY generally means the US dollar is more valuable relative to other currencies in the index, making US goods more expensive abroad, but imports cheaper
- Below 100: A value below 100 indicates a weaker dollar compared to its 1973 value. This can make US exports more competitive internationally, but can also increase the cost of imported goods for US consumers
What factors influence the price of the USDX?
- US economic indicators like GDP growth, inflation, and unemployment
- Federal Reserve interest rate changes and monetary policy
- Geopolitical events that cause uncertainty in global markets
- Trade balances between the U.S. and its trading partners
- Global economic conditions, such as demand for US exports
What are the benefits of trading the US Dollar index DXY using CFDs?
- DXY is widely recognised as a benchmark for the US dollar’s strength
- It provides an accurate gauge of the dollar’s international purchasing power
- This index acts as a key economic indicator for global trade and investment
- It helps investors and speculators predict the impact of US interest rate changes on the dollar
24-hour market
Unlike other financial markets, the forex market operates 24-hours a day, five days a week, allowing you to trade at any time that suits you, regardless of your location
Trade long or short
With forex trading,you have the flexibility to profit in both rising (long) and falling (short) markets, giving you more opportunities to make profitable trades
Diverse trading opportunities
With a wide range of currency pairs to choose from, you’ll be able to find trading opportunities in most economic conditions and market types
Access to leverage
Let your trading benefit from high leverage opportunities, allowing you to control a larger position with a smaller capital investment, potentially increasing your profits
Trade long or short
Trading DXY using CFDs allows you to profit from both rising and falling markets, offering flexibility in various market conditions
Relative stability
The US Dollar index is considered a relatively stable index compared to other financial assets like cryptocurrency, for example.
Global market connectivity
Trading DXY CFDs often comes with the ability to trade other indices, commodities, forex, and stocks from the same platform.
Hedging opportunities
CFDs such as the US Dollar index can be used to hedge existing positions in other related assets
Frequently asked questions
Does the US Dollar index have high liquidity?
Yes, the DXY is highly liquid, reflecting the strong demand for the US dollar in global markets.
The DXY is also used in various financial products in addition to CFDs, including futures, options, and ETFs. This widespread usage across different asset classes increases its liquidity.
Why is the US Dollar index so popular to trade?
Reasons include:
- Global reserve currency: The US dollar is the world’s dominant reserve currency, used by central banks and governments worldwide. This demand contributes to the high liquidity of this index.
- Widespread use: The US dollar is the primary currency in international trade, particularly in commodities like oil. This ensures that there is constant trading activity involving the USD
- Forex market: The USDX benefits from the huge liquidity of the foreign exchange market, where the U.S. dollar plays a central role. USD is involved in nearly 90% of all forex transactions, making it one of the most traded currencies globally
Is the DXY a good index for beginners?
Yes, the DXY is relatively stable compared to some other indices, making it suitable for beginners.
However, understanding its market influences is important before trading.
How much capital do I need to trade DXY?
The required capital depends on the margin requirement set by your broker. For example, when trading with MarketMates, the margin is 1%. This means you’ll need $100 to open a $10,000 position.
Always ensure you have sufficient funds to manage potential losses and avoid margin calls.
What are DXY trading hours?
The DXY (US Dollar Index) does not have specific trading hours because it is not directly traded as an asset. Instead, it is a calculated index based on the exchange rates of six major currencies against the US dollar.
However, since these currencies trade in the forex market, the DXY is indirectly available for trading during forex market hours.
The forex market operates 24 hours a day, five days a week, overlapping with major financial centres.
Here are the key forex trading sessions in UTC time:
- Sydney session: 10.00pm to 7.00am UTC
- Tokyo session: 12.00am to 9.00am UTC
- London session: 8.00am to 5.00pm UTC
- New York session: 1.00pm to 10.00pm UTC
As a result, the DXY can be tracked or traded nearly 24/5 through derivative products like CFDs.
Always check the trading hours with your broker, as availability may vary.
Why MarketMates?
Marketmates is a fairer, more transparent way to trade from a broker who is on YOUR side
Get started with a FREE account for unlimited trading, with no markups on spread, swap or commission
USDX Index Chart
A powerful chart for you to use with all the customisable options you’d expect from TradingView.
Change the ticker, the time view, the type of chart you wish to view, and then add your favourite indicators.
Indices Market Data
This market data list provides a broad overview of indices market performance, including value, change per cent, open, high, low and previous price.
Indices Market News
Keep track of what’s happening in the financial markets with this daily news summary, filtered to bring you the most important news as it happens.
Use the slider on the right-hand side to reveal more news items.
Economic Calendar for the World's Top 20 Economies
Never miss vital upcoming economic events with this customisable economic events calendar, currently set to show calendar events from the Top 20 world economies.
See all the events and announcements you need to know, with the ability to set up filters for:
- Event importance (all, or key events only)
- Different countries or regions
