US DOLLAR INDEX Forecast and News


US Dollar Index declines towards 114.00, Fed Powell’s speech hogs limelight

The US dollar index (DXY) is on the verge of delivering a downside break of the consolidation formed in a narrow range of 114.27-114.10. The DXY is expected to decline towards the round-level support of 114.00 as the asset has failed to sustain above 114.40 after multiple attempts.

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EUR/USD braces for fresh multi-year low around 0.9600, ECB’s Lagarde, Fed’s Powell eyed

EUR/USD braces for fresh multi-year low around 0.9600, ECB’s Lagarde, Fed’s Powell eyed

EUR/USD holds lower grounds around the yearly bottom marked on Monday, despite picking up bids to 0.9600 during Wednesday’s Asian session, as risk-aversion intensifies. Firmer US data, hawkish Fedspeak joined upbeat yields to weigh on prices.

EUR/USD News

GBP/USD: Inside candle favors a pullback, 1.1000 a key hurdle

GBP/USD: Inside candle favors a pullback, 1.1000 a key hurdle

The GBP/USD pair has turned sideways after a strong rebound from a fresh multi-decade low of 1.3565 on Monday. The cable is displaying back-and-forth moves in a range of 1.0661-1.0832 and is displaying a volatility contraction phase. 

GBP/USD News

USD/JPY: Bears eye a break of key lower timeframe structures

USD/JPY: Bears eye a break of key lower timeframe structures

USD/JPY offers a compelling bearish playbook on a 15-minute chart and a break of 144.56 could be on the cards. The daily chart's broadening formation is a bullish feature.

USD/JPY News

Gold dribbles above $1,600 as inverted hammer contrasts risk-aversion

Gold dribbles above $1,600 as inverted hammer contrasts risk-aversion

Gold price struggles to find acceptance at around $1,630, despite bullish technical signals, as fears of the European energy crisis join firmer yields to propel the US dollar. Bullish candlestick can play its role if Fed’s Powell resists praising hawks.

Gold News

WTI licks its wounds near $77.00 as recession woes ebb, US macro, API inventories eyed

WTI licks its wounds near $77.00 as recession woes ebb, US macro, API inventories eyed

WTI crude oil portrays a corrective bounce amid Tuesday’s quiet Asian session, around $77.10 by the press time of the pre-European session. In addition to the lack of data/events during early Tuesday, the US dollar’s pullback and hopes of avoiding the recession seem to have favored the energy benchmark’s recovery from the lowest levels since January 2020.

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DOLLAR INDEX, USDX

The U.S. Dollar Index (USDX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies. These currencies are the Euro (constituting 57.6% of the weighting), Japanese Yen (13.6%), British Pound (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%) and Swiss Franc (3.6%). The index started in 1973 -with the absolution of Bretton Woods- with a base of 100.000, and values since then are relative to this base. For example, if the current reading says 99.800, this means that the dollar has fallen 0.2% since the start of the index (99.800 - 100.000).
Being the Dollar Index a geometrically weighted index and not a trade-weighted one, it is too concentrated in Europe and does not include two of the U.S. top four trading partners Mexico and China. It does not appear to be used by corporates or many asset managers, like mutual funds, insurance companies, and endowments. It is primarily a speculative vehicle. It's also important to acknowledge that a geometric mean artificially lowers the value of the USD over time.

ORGANIZATIONS, PEOPLE AND ECONOMIC DATA THAT INFLUENCE DOLLAR INDEX

The US Dollar Index news can be seriously affected by the decisions taken by these organizations and people:

  • Fed, the Federal Reserve of the United States whose president is Jerome Powell. The Fed controls the monetary policy, through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis.
  • The US Government: events as administration statements, budget, new laws and regulations or fiscal policy can increase or decrease the value of the Dollar Index.
  • The US Treasury Dept that defines its role as “the steward of U.S. economic and financial systems, and as an influential participant in the world economy.”
  • US GDP (Gross Domestic Product), the total market value of all final goods and services produced in the United States of America. It is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Generally speaking, a high reading or a better than expected number is seen as positive for the Dollar Index, while a low reading is negative.

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The US Dollar Index

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.

A Look at the US Dollar Index

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.