US Dollar Index News: DXY Fortified by 17-Year High in 10-Year Treasury Yields
European Central Bank’s vice-president Luis de Guindos cautioned that discussing interest rate cuts was “premature,” further weakening the euro’s position. For the major indices on the site, this widget shows the percentage of stocks contained in the index that are above their 20-Day, 50-Day, 100-Day, 150-Day, and 200-Day Moving Averages. US stock markets have been in long-term uptrends since the end of last October. I don’t see Wednesday’s Federal Reserve announcement changing that fact. Because the USDX is so heavily influenced by the euro, traders have looked for a more “balanced” dollar index.
- Conversely, countries that import heavily favour a stronger currency to reduce the foreign exchange cost of paying for those imports.
- Follow the rate of the US Dollar Index (DXY) in real-time at Capital.com to spot the best trading opportunities.
- In this week’s instalment, we delve into the Break & Retest pattern—a strategic approach to navigating breakout trades.
- For example, it rose as the current account generated a surplus in the 1990s, fell as US debt levels increased in the 2000s, and rallied as investors flocked to the relative safety of the Dollar during the Great Recession.
- You can also apply direct Technical Analysis to the DXY, in order to calculate how the DXY is going to move.
First and foremost, if the DXY raises, it will push the USD base pairs higher, and push USD quote pairs lower. USD base pair – such as USD/CHF, and USD/CAD will move with the DXY, as all these currencies are incorporated into the DXY, with USD being on the front end. Inversely USD quote pairs – such as EUR/USD and XAU/USD – will move in the opposite direction of the DXY, creating more space between the quote pairs and the DXY, as USD is on the tail end of these pairs. Another notable component of the DXY is that it shares a directly inverse correlation with the EUR/USD, as the Euro makes up almost 60 percent of the DXY currency basket.
By using this site, you implicitly agree that nothing contained on the site shall be construed as a solicitation to buy or sell any product or service in a jurisdiction where its purchase or sale would be contrary to local laws. The euro is the world’s second leading reserve currency behind the U.S. dollar. The euro is the pan-European currency that changed the foreign exchange market at the turn of this century. The US Dollar Index can be traded using futures and options or, where permitted, spread betting and CFD trading can also be used to speculate on whether the USDX will go up or down in price. Read more on how to trade US Dollar Index for technical strategies and tips.
Why it is important for traders to understand the DXY
Monday’s U.S. economic news was mostly better than expected and bullish for the dollar. The Sep ISM manufacturing index rose +1.4 to 49.0, stronger than expectations of 47.9. Also, Aug construction spending rose +0.5% m/m, right on expectations.
The liquidity on the futures contract for the US Dollar Index comes from the spot currency market, which ICE estimates has a daily turnover of more than $2trn. There is a market maker program that helps to ensure continuous liquidity throughout the day in electronic trading. There is some debate in the currency markets that the US Dollar Index should be reformulated to include currencies from emerging markets that have become larger US trading partners, such as China and Mexico. As a stronger currency can reduce demand for exports to other countries that pay for the goods with relatively weaker currencies, some governments pursue policies to keep down their nation’s currency value. Conversely, countries that import heavily favour a stronger currency to reduce the foreign exchange cost of paying for those imports.
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What influences the value of the DXY Index?
The U.S. Dollar Index consists of a geometric weighted average of a basket of foreign currencies against the dollar. Supply and demand for currencies is heavily influenced by the monetary policies – particularly the interest rates – set by the central bank in each country. Other factors include inflation, economic performance, credit ratings, market sentiment and foreign affairs. The U.S. Dollar Index (USDX) is a relative measure of the U.S. dollars (USD) strength against a basket of six influential best markets to trade currencies, including the Euro, Pound, Yen, Canadian Dollar, Swedish Korner, and Swiss Franc. The USDX can be used as a proxy for the health of the U.S. economy and traders can use it to speculate on the dollar’s change in value or as a hedge against currency exposure elsewhere. The index is affected by macroeconomic factors, including inflation/deflation in the dollar and foreign currencies included in the comparable basket, as well as recessions and economic growth in those countries.
Browse our live DXY chart to get all the information you need on the rate of the US Dollar Index today.
ICE, specifically, ICE Futures U.S., monitors the index methodology to ensure that it properly reflects the covered currencies and the FX market in general and makes adjustments as and when necessary (which is like…never). The Index was adjusted once when the euro was introduced as the common currency for the European Union (EU) bloc of countries. Today, the company is among the largest exchange groups in the world.
EUR/USD is currently testing a key support level after the Federal Reserve indicated a potential extension of higher interest rates. You can follow the ups and downs of the Dollar Index at Capital.com. Always stay on top of the latest price developments with our DXY live chart.
She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest. The greenback posts five winning days in a row, boosted by possible inflation resurgence.Another day, another dollar gain. The greenback posts five winning days in a row, boosted by possible inflation resurgence.
Check out the latest USD Index price with our chart and follow the latest news and analysis from our DailyFX experts. The below chart shows some of the major events that affected the USDX price since 2005. Before the Euro, the index also included five other European currencies. The US Dollar Index was started by the Federal Reserve in 1973 and has been managed by ICE Futures US since 1985. It compares the value of the US Dollar against six currencies used by major US trade partners – the Euro (EUR), Japanese Yen (JPY), Pound Sterling (GBP), Canadian Dollar (CAD), Swedish Krona (SEK) and Swiss Franc (CHF).
A surging U.S. dollar just sent gold to a 6½-month low below $1,900 an ounce
Dollar Index futures and options on futures are available exclusively on the ICE electronic trading platform. Since then, the US Dollar Index has tracked economic performance and liquidity flows. For example, it rose as the current account generated a surplus in the 1990s, fell as US debt levels increased in the 2000s, and rallied as investors flocked to the relative safety of the Dollar during the Great Recession. The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to a basket of foreign currencies. Federal Reserve in 1973 after the dissolution of the Bretton Woods Agreement. It is now maintained by ICE Data Indices, a subsidiary of the Intercontinental Exchange (ICE).
Similarly, if the index is currently 80, falling 20 from its initial value, that implies that it has depreciated 20%. The appreciation and depreciation results are a factor of the time period in question. The U.S. Dollar Index has risen and fallen sharply throughout its history. Over the last several years, the U.S. dollar index has been relatively rangebound between 90 and 110.
U.S. 10-year Treasury yields reached near 17-year highs, registering at 4.629%, a 6-basis point rise. The Federal Reserve’s consistent hawkish stance has been a significant factor in the dollar’s recent strength, contributing to its best quarterly performance in a year. This website is using a security service to protect itself from online attacks. There are several actions that could trigger this block including what is an iceberg order submitting a certain word or phrase, a SQL command or malformed data. In this week’s instalment, we delve into the Break & Retest pattern—a strategic approach to navigating breakout trades. If you’ve wrestled with the frustration of false breakouts, incorporating this pattern into your trading toolkit may help you overcome this challenge and put you on the path to becoming a more confident and consistent trader.
USDOLLAR further reading
We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools. We’re also a community of traders that support each other on our daily trading journey. Dollar Index in 1985, ICE compiles, maintains, determines, and weights the components of the U.S. If you’ve traded stocks, you’re probably familiar with all the indices available such as the Dow Jones Industrial Average (DJIA), NASDAQ Composite Index, Russell 2000, S&P 500, Wilshire 5000, and the Nimbus 2001.
The value of the US Dollar Index fell in 2020 after the initial flight to safety, as the US Federal Reserve policy to reduce interest rates to record lows and stimulate investment reduced the value of the dollar. In addition to futures and options contracts, one of the easiest and most popular ways to trade the DXY is with contracts for difference, or CFDs. A CFD is a type of contract, typically between a broker and a trader, where one party agrees to pay the other the difference in the value of an asset, between the opening and closing of the trade. Therefore, when you trade DXY using CFDs, you speculate on the direction of the underlying asset’s prices without actually owning it.