How to Read the US Dollar Index

As we have defined what US Dollar Index is the same as any currency pair, the US Dollar Index (USDX) even has its own chart.

Yell at the U.S. Dollar Index:

One thing to first of all note is that the index is calculated 24 hours a day, five days a week. Also, the US Dollar Index (USDX) compute the general value of dollar relative to a base of 100.000.

Alright. For instance, take the current reading says 86.212.

What this means is that the dollar has loose 13.79% since the start of the index. (86.212 – 100.000). While If the reading was 120.650, then it means the dollars value has risen 20.65% since the start of the index. (120.650 – 100.00)

The origin of the US Dollar Index is March 1973. This is when the worlds biggest nations had a meeting in Washington D.C. and all agreed to allow their currencies to float freely against each other. The index was established shortly after the Bretton Woods Agreement dissolved in 1973 with a base of 100, and values since then are relative to this base. The start of the index is also known as the “base period”.

The U.S. Dollar Index Formula

This is same for the grown and geeky. Here is the formula for calculating USDX:

USDX = 50.14348112 × EUR/USD^(-0.576) × USD/JPY^(0.136) × GBP/USD^(-0.119) × USD/CAD^(0.091) × USD/SEK^(0.042) × USD/CHF^(0.036)