Forex Smart Trade Results, Friday, May 24, 2024 – $1,470
Forex Smart Trade Results, Thursday, May 23, 2024 – $1,489
June 2, 2024
Forex Smart Trade Results, Monday, May 27, 2024 – $1,679
June 3, 2024
US Dollar Index (USDX) Components.
Now that we know what the basket of currencies is composed of, let’s get back to that “geometric weighted average” part.
Because not every country is the same size, it’s only fair that each is given appropriate weights when calculating the U.S. dollar index.
Check out the current weights:
With its 19 countries, euros make up a big chunk of the U.S. Dollar Index.
The next highest is the Japanese yen, which would make sense since Japan has one of the biggest economies in the world.
The other four make up less than 30 percent of the USDX.
Here’s a question…
When the euro falls, which way does the U.S. Dollar Index move?
The euro makes up such a huge portion of the U.S. Dollar Index, we might as well call this index the “Anti-Euro Index“.
FUN FACT: Before the creation of the euro, the original USDX contained ten currencies: the ones that are currently included (except the euro), plus the West German mark, the French franc, the Italian lira, the Dutch guilder, and the Belgium franc. The euro replaced the last five of these currencies.
Because the USDX is so heavily influenced by the euro, traders have looked for a more “balanced” dollar index.
We will cover two other U.S. dollar indexes later:
- Trade Weighted Dollar Index
- Bloomberg Dollar Spot Index
As a currency trader, you should be familiar with ALL three of them.
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