The US Dollar Index started in 1973 after the dismantling of the Bretton Woods system. The index is one of the most important financial instruments on Forex. USDX is used both in trading and forecasting the movements of other currencies.
Stock indices show the general condition of stock markets, and the USDX reflects the international evaluation of the US dollar. Index reading is provided inline. Its calculation is based on the information about currency operations executed on Forex market.
USDX indicates the correlation between the US dollar and its major counterparts: the euro, Japanese yen, British pound, Canadian dollar, Swiss franc and Swedish krona.
Regardless of a currency pair or Expert Advisors a trader may use in trading, he/she should remember that the US dollar always has an impact on the currency rates. The USDX may be used as a base point for estimation of the US dollar’s strength or weakness. Moreover, pay attention to the index when analyzing the Forex market in a whole.
Using USDX along with the candlesticks, moving averages, support and resistance levels, a trader can realize the strength of the US dollar, its rates’ possible reverses, long-term trends and sentiment of some participants of the currency market. This information enables trader to make correct decision when buying or selling the currency.
The US Dollar Index reading is available on the special websites, which provide information on the alterations occurred on the currency markets, systems and programs which a trader needs for successful work on Forex market.