What is the relationship between the dollar and the dollar index?

What is the dollar index? The US dollar is the most liquid currency in the world, so the US dollar index is also a very important indicator in foreign exchange speculation. So what is the relationship between the dollar and the dollar index? This article will tell you what the dollar index is and its relationship with the dollar index.


What is the dollar index?
The US dollar index (USDX) is an indicator that comprehensively reflects the exchange rate of the US dollar in the international foreign exchange market, which is used to measure the exchange rate changes of the US dollar against a basket of currencies.
The US dollar index measures the strength of the US dollar by calculating the combined rate of change of the US dollar and the selected basket of currencies, thus indirectly reflecting the changes in US export competitiveness and import costs.

What is the relationship between the dollar and the dollar index
The rise of the US dollar index indicates that the US dollar has risen in comparison with other currencies, which indicates that the US dollar has appreciated. The prices of major international commodities are calculated in US dollars, and the corresponding commodity prices should fall. The appreciation of the US dollar is good for the whole economy of the country, increasing the value of the domestic currency and increasing the purchasing power. However, there are also impacts on some industries. The export industry and currency appreciation will increase the price of export commodities, which will affect the export commodities of some companies. If the U.S. index falls, the opposite is true.

From the weight of each currency in the US dollar index, we can see that the relationship between the US dollar and the euro is the closest. The trend of the US dollar index and the euro is negative correlation. If the US dollar index rises, the euro will fall.

When we analyze a currency pair, especially the currency pair related to the US dollar index, it is more effective and important to add the US dollar index as one of the indicators into the analysis system.

That's all about the relationship between the US dollar and the US dollar index. More exciting real-time financial information can be found on our website.

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