The greenback, when tracked by the US Dollar Index, stays on a positive note so far, challenging the area of daily highs in the 99.30/35 band.
The performance of the U.S. Dollar Index (orange line) since December 2015, compared to the performance of the S&P 500 stock index (green line), the Spot Gold price (brown line) and the Dow Jones Utilities Average, a proxy for the U.S. 10-Year Treasuries. Zoom on the chart to get more history.
How Bullish is the USD?
The Bullish Percent Index measures how strong a currency is against a basket of other 20 currencies.
For each of these currencies a cross rate is calculated and plotted on a price and figure chart.
It then evaluates how many of these crosses are on bullish mode.
The percentage indicates how bullish that currency was against all the other 20, as of yesterday's close.
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What's the DXY?
The US Dollar Index is a leading benchmark for the international value of the US dollar. The composition if the DXY Index is heavily weighted towards the Euro and European countries that have not joined the European common market. The components (and weightings) of the Dollar Index are: Euro (57.6%), Japanese Yen (13.6%), Great Britain-Pound Sterling (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%), and Swiss Franc (3.6%).
Because the composition of the Dollar Index is so heavily biased towards the Euro and European economies, it is sometimes referred to as the Anti-Euro Index. It's important to acknowledge that a geometric mean and a geometrically weighted index artificially lowers the value of the USD over time.
US Dollar Index on Wikipedia
Want to learn more on US Dollar Index?
The US dollar has been the anchor currency of the international financial systems for decades. It is the currency of the largest economy with the most liquid financial market of the world and therefore there is no way around it. The US Dollar Index is an easy way to observe the development of the US dollar compared to the most important foreign currencies. In this article we talk about the calculation, the correlation to other asset-classes and how to use this knowledge in trading. The US Dollar Index (USDX) represents the value of the US dollar compared to a basket of six currencies. It was introduced in the year 1973 with a value of 100 and it is traded as a futures contract at the ICE futures US. The US Dollar Index represents a geometrically weighted average of the US currency compared to the following currencies: Euro (EUR), Japanese yen (JPY), British pound (GBP), Canadian dollar (CAD), Swedish crown(SEK) and Swiss franc (CHF).
When I write the Online Trading Academy Forex newsletter, I give my opinion about what I believe is happening to the currencies of the world based on the news I hear, the experts I follow, and my personal experiences of the economic cycles I have seen in the past. This fundamental information helps me understand what reports and indicators the economists of the world believe will shape future events. The charts provide me with the clues as to where the buyers and sellers are waiting to act in the future based on their actions in the past. As such, when I do my analysis, I always factor in the message from the charts as the final and most important piece of the puzzle before I act on my opinion. The US Dollar Index (USDX) is the main currency chart I watch for clues as to the sentiment of the currency traders of the world, and for the places where battles have taken place in the past that may once again shape the future.
Have you watched the US Dollar Index (USDX) Futures contract trade during the day? Do you notice that with each price change the intervals are always a minimum tick of .005? And then at the end of the day when you look at your daily candle of the USDX you see a closing price like 97.197. I want to shed some light on this topic of how the Intercontinental Exchange (ICE) settles the USDX each day. Free WorkshopWith each Futures contract traded on any Futures Exchange, they each have their own unique contract specifications. One of the standardized specifications is something called a minimum tick increment. Unlike a Stock, all Futures contracts trade at their minimum tick increments as the smallest possible price change. No trading is allowed between the bid/ask price. This will make the bid/ask spread at a minimum .005 wide at any point during the trading session.
Over the last few months especially, there’s been a lot of focus in the world of Currency Trading upon the state of the US Dollar. No matter what your opinion is of the Greenback, it is still, without question, regarded as the world’s primary reserve currency and holds its weight of recognition across the board. Any active trader in today’s FX markets should be aware of the performance of the dollar at any given time not only because of its status as the world’s leading currency, but also because it can give us clues as to the behavior of other currency pairs as well. This is a key concept which is taught in the Online Trading Academy Professional Forex Trader class, because we know the importance of the US dollar when trading the global currency markets. Just by knowing the value of the dollar and how its current price relates to previous levels historically can give the disciplined trader a distinct advantage over the competition.