The Importance of the US Dollar Index
According to the 2019 Triennial Survey of turnover in OTC Forex markets, the US dollar retained its dominant currency status, on one side of 88% of all trades. Additionally, more than 60% of foreign exchange reserves are denominated in dollars, according to the International Monetary Fund. Traditional major currency pairs also include the US dollar. On top of this, the greenback is the standard currency in the commodity market and therefore directly impacts commodity prices. What Is the US Dollar Index? The majority of traders understand how support and resistance levels are applied on charts and also know how to read technical indicators, such as the relative strength index. Another tool that deserves mention, however, is the US dollar index. Developed in March 1973 by the United States Federal Reserve, the US dollar index, or more commonly referred to as the ‘DXY’ (ticker symbol used by Bloomberg’s Terminal) or ‘USDX’, is a measure of the value of the US dollar against a basket of si...