What is DXY? The US Dollar Index explained for forex traders

DXY, the US Dollar Index, measures the value of the US dollar against a fixed basket of six major currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. It started at 100 in March 1973, so a reading of 104 means the dollar is roughly 4% stronger against that basket than it was then, and a reading of 95 means roughly 5% weaker.

Because the euro alone makes up 57.6% of the basket, DXY behaves much like an upside-down EUR/USD chart. That makes it useful as a quick read on broad dollar strength against other developed-market currencies, and less useful as a measure of the dollar against the whole world.

What DXY is and who publishes it

The index is owned and calculated by ICE (Intercontinental Exchange), which lists futures and options on it. "DXY" is the ticker most charting platforms and news services use for the spot index; you will also see "USDX" and, for the futures contract, "DX". All three refer to the same underlying calculation.

The index was created in 1973, shortly after the Bretton Woods system of fixed exchange rates broke down and major currencies began to float. March 1973 was chosen as the base period and set to 100. The original basket held ten currencies, including the German mark, French franc, Italian lira, Dutch guilder and Belgian franc. When the euro arrived in 1999 it replaced those five national currencies in the basket, and the weights have been fixed ever since.

The glossary entry for DXY gives the short version. This guide goes further: the formula, the maths of what moves it, how it compares with the Fed's broad index, how it is traded and how to use it without reading too much into it.

The basket and its weights

The six currencies and their weights are:

• Euro (EUR): 57.6%
• Japanese yen (JPY): 13.6%
• British pound (GBP): 11.9%
• Canadian dollar (CAD): 9.1%
• Swedish krona (SEK): 4.2%
• Swiss franc (CHF): 3.6%

The weights were originally based on US trade with those countries in the 1970s, then merged when the euro took over the five eurozone currencies. They have not been updated for changes in trade patterns since, which is the single most important thing to know about DXY. Today the United States trades heavily with China and Mexico, neither of which is in the basket, while Sweden carries more weight than either.

The practical consequence is simple. Roughly 58% of every move in DXY comes from the euro, a little over a quarter from the yen and the pound combined, and the rest from the Canadian dollar, krona and franc. When someone says "the dollar index fell 0.5% today", the first question worth asking is what EUR/USD did.

How DXY is calculated

DXY is a geometric weighted average of six exchange rates rather than a simple average. The commonly published form of the formula is:

DXY = 50.14348112 × EURUSD^(−0.576) × USDJPY^(0.136) × GBPUSD^(−0.119) × USDCAD^(0.091) × USDSEK^(0.042) × USDCHF^(0.036)

Three details explain how to read it:

1. The exponents are the weights. Each currency's weight appears as a power. 0.576 is the euro's 57.6%, 0.136 is the yen's 13.6%, and so on.
2. The signs depend on how each pair is quoted. EUR/USD and GBP/USD are quoted with the dollar as the quote currency, so a higher EUR/USD means a weaker dollar. Those two get negative exponents so that a rising euro pushes the index down. USD/JPY, USD/CAD, USD/SEK and USD/CHF are quoted with the dollar as the base currency, so a higher rate already means a stronger dollar and the exponents are positive. The currency pairs guide explains base and quote currencies if that distinction is new.
3. The constant sets the starting point. 50.14348112 is the scaling factor that makes the formula equal 100 at the March 1973 base exchange rates. It has no economic meaning beyond that.

The geometric form matters because it treats percentage moves consistently. A 1% rise in a currency has the same effect on the index whatever level that exchange rate happens to be trading at, and moves compound multiplicatively rather than adding up in pips.

ICE calculates the index continuously from spot rates while markets are open, so it trades through the same 24-hour weekday cycle as the currency market itself. The forex market hours guide covers when that liquidity is deepest.

Worked example: what a 1% EUR/USD move does to DXY

This is an illustrative example. Suppose DXY is at 100.00 and EUR/USD rises 1% in a day while the other five exchange rates do not move.

The quick approximation. For small moves, the percentage change in DXY is roughly each pair's percentage change multiplied by its weight and sign. The euro's term is −0.576 × 1% = −0.576%, so DXY falls by about 0.58%, to roughly 99.42.

The exact calculation. The euro term in the formula is EURUSD raised to the power −0.576. If EUR/USD is multiplied by 1.01, that term is multiplied by 1.01^(−0.576), which works out to about 0.99430. DXY therefore falls by about 0.57%, to roughly 99.43.

The difference between 0.576% and 0.570% comes from the geometric formula: the linear shortcut slightly overstates the effect, and the gap grows with the size of the move. For a 1% move it is small enough to ignore, which is why traders use the weight as a rule of thumb. For a 5% move you would want the exact calculation.

Now add a second currency. Suppose on the same day USD/JPY also falls 1% (the yen strengthens). The yen term contributes roughly +0.136 × (−1%) = −0.136%, so DXY falls by about 0.71% in total. If instead USD/JPY had risen 1%, the yen would offset part of the euro's effect and DXY would fall only about 0.44%.

The lesson from the arithmetic: a move of the same size in USD/CHF moves DXY one sixteenth as much as a move in EUR/USD. A strong franc story barely registers in the index.

DXY vs EUR/USD

Because of that 57.6% weight, the correlation between daily changes in DXY and EUR/USD is strongly negative most of the time. The two charts look like mirror images, with the differences coming from the other 42.4% of the basket.

That residual is where the information is. Three common situations:

• DXY up, EUR/USD down by a similar proportion. The move is mostly about the euro, or about the dollar against the euro specifically. Check what is happening in the eurozone before assuming a broad dollar story.
• DXY up, EUR/USD barely moved, USD/JPY sharply higher. The yen is doing the work. This often happens around Bank of Japan decisions or moves in Japanese and US bond yields.
• DXY up, EUR/USD down, USD/JPY up, GBP/USD down, USD/CAD up. The dollar is strengthening against everything at once. That is a genuine broad-dollar move, often driven by US data, a shift in Federal Reserve expectations or a flight to dollar liquidity.

This is the most practical use of DXY for a currency trader: it helps separate dollar moves from non-dollar moves. It also exposes positions that look different but share one bet. If you hold short EUR/USD, short GBP/USD and long USD/CAD, you effectively have three positions on one idea, and DXY is a quick way to see that idea moving. The currency correlation guide shows how to measure that hidden dollar exposure and why stacking it multiplies risk.

The relationship with EUR/USD can be checked on the EUR/USD pair page, which also covers what typically drives the pair.

DXY and gold

Gold is priced in dollars, so when the dollar strengthens the same ounce costs fewer dollars, other things equal. That gives a mechanical reason for XAU/USD and DXY to move in opposite directions, and over many periods they do.

The relationship is much looser than the one with EUR/USD, though, for three reasons:

• Gold has its own drivers. Real interest rates, central-bank buying, safe-haven demand and jewellery and investment demand all matter. The gold and silver guide walks through them.
• Both can be safe havens at once. In a sharp risk-off episode, investors may buy dollars and gold together, so both rise.
• The correlation changes over time. There have been long stretches where gold and the dollar rose together. A historical correlation is a description of the past, not a rule.

A reasonable way to use DXY with gold is as one input. If gold falls on a day DXY jumps, a stronger dollar is a likely part of the explanation. If gold falls while DXY is flat, look elsewhere, for example at bond yields. The XAU/USD pair page has more on how the metal trades as a CFD.

DXY vs the Federal Reserve's broad dollar index

DXY's narrow basket is its biggest weakness as an economic measure. The Federal Reserve Board publishes its own trade-weighted dollar indices in its H.10 foreign exchange release, and the headline one, the Nominal Broad U.S. Dollar Index, is designed to answer a different question: how strong is the dollar against the currencies of the countries the US actually trades with?

The main differences:

• Coverage. The Fed's broad index includes a much wider set of currencies, including the Chinese yuan, Mexican peso, South Korean won, Indian rupee and Brazilian real alongside the euro, yen, pound and Canadian dollar.
• Weights. Its weights are based on trade in goods and services and are updated over time, so they reflect the US economy as it is now rather than as it was in the 1970s.
• Base date. It is indexed to January 2006 = 100, so its level is not comparable to DXY's level. Only the direction and size of changes can be compared.
• Use. Economists and policymakers use the broad index for questions such as the dollar's effect on US trade and inflation. Traders use DXY because it trades in real time, has futures and options and appears on every charting platform.

Most of the time the two move in the same direction, since the euro and yen matter to both. They diverge when emerging-market currencies move independently, for example when the yuan or peso moves sharply while the euro is steady. In that case DXY may barely change while the broad index shows a meaningful dollar move.

The Fed's daily series is freely available through the Federal Reserve's H.10 release and the St Louis Fed's FRED database.

What moves DXY

Since DXY is just a basket of exchange rates, it moves for the same reasons any of those rates move. The guide to what moves currency prices covers this in depth. In short:

• Interest rate expectations. When markets expect the Federal Reserve to keep rates higher than the European Central Bank, Bank of Japan and others, the dollar tends to be supported, and vice versa. The central banks and interest rates guide explains how rate differentials and forward guidance feed into currencies.
• US economic data. Releases such as payrolls and inflation shift those expectations. The index often jumps or drops in the minutes after a big release.
• Eurozone news. Because of the euro's weight, ECB decisions and eurozone data can move DXY as much as US news can.
• Risk sentiment. In stress, demand for dollars as the main funding and reserve currency often lifts the index, although the yen and franc, also in the basket, can rise too.
• Flows and positioning. Month-end and quarter-end rebalancing, hedging and large cross-border transactions all leave their mark.

None of this produces a reliable forecast. It helps you understand a move after the fact and prepare for the events that could cause the next one.

How traders get exposure to DXY

There are two main routes.

Futures and options on ICE. The US Dollar Index futures contract trades on ICE Futures U.S. under the symbol DX. One contract is worth $1,000 multiplied by the index value, so with the index at 100 the notional value is about $100,000, and a one-point move changes the value of one contract by $1,000. Futures have expiry dates on a quarterly cycle and require a futures account, which most retail forex traders do not have.

CFDs offered by brokers. Many CFD brokers offer a dollar index CFD, often labelled USDX or DXY. These are usually priced from the futures contract, not the spot index, so the price can differ slightly from the index you see on a chart. Contract sizes, trading hours, financing charges and whether the CFD rolls from one futures month to the next all vary by broker, so read the instrument specification before trading one. A CFD on an index is still a leveraged product, and the same risks apply as with any other CFD.

The indirect route. Many traders never trade DXY itself. They watch it and express a view through individual pairs, most often EUR/USD, since that pair has the deepest liquidity and tightest spreads. The cost of that approach is that a single pair carries the other currency's risk too.

Why DXY is not the whole dollar story

DXY is useful precisely because it is simple and widely followed. Its limits come from the same place:

• It is mostly a euro index. A large DXY move with a quiet EUR/USD is rare. When EUR/USD moves on purely European news, DXY moves too, even though nothing about the US has changed.
• It ignores emerging markets. The dollar can strengthen sharply against the yuan, peso, rand or lira while DXY is flat. For anyone trading exotic pairs, DXY says little.
• The weights are frozen. They reflect 1970s trade with countries that have since changed their roles in the world economy. Sweden is in, China is not.
• A level is not a valuation. DXY at 105 does not mean the dollar is overvalued, or at 90 that it is cheap. It means the dollar is a certain percentage above or below its 1973 level against six currencies. Long-run valuation needs other tools, such as real effective exchange rates adjusted for inflation.
• It is a single number for many relationships. A flat DXY can hide a strong euro and a weak yen cancelling each other out.

How to use DXY in practice

Some sensible, low-drama ways traders use the index:

1. As a regime check. Before a session, glance at whether DXY is trending, ranging or reversing on the timeframe you trade. If you are about to buy EUR/USD in the middle of a strong broad-dollar rally, you are at least aware that you are trading against it.
2. As an explanation tool. When a pair moves, compare it with DXY to see whether the move is broad or specific. That improves your notes in a trading journal and your understanding of what moved your trades.
3. As an exposure check. Add up how many of your open positions are effectively long or short the dollar. If most of them are, a single DXY move affects your whole account.
4. Around big US events. On days such as payrolls or a Fed decision, DXY shows the market's overall reaction faster than any single pair.

What DXY should not be is a signal generator. A DXY breakout does not tell you EUR/USD must fall, and a DXY level does not tell you where the dollar is going next.

Common mistakes

• Treating DXY as "the dollar". It is the dollar against six currencies, with more than half the weight in one of them.
• Double-counting EUR/USD. Using DXY to confirm a EUR/USD trade is largely using EUR/USD to confirm itself.
• Comparing levels with the Fed index. The two have different base dates and baskets. Compare changes, not levels.
• Assuming the gold relationship is fixed. Gold and the dollar often move in opposite directions, but not always, and the relationship can break for months.
• Trading a dollar index CFD without reading the specification. CFD prices often track the futures contract, roll between expiries and carry financing costs. Check the contract size and what one point is worth before placing a trade.
• Ignoring the yen. At 13.6% the yen is the second-largest weight. Big moves in USD/JPY show up clearly in DXY.

Frequently asked questions

What does DXY stand for?

DXY is the ticker for the US Dollar Index, published by ICE. You will also see it called USDX, and the futures contract on it trades under the symbol DX. All refer to the same index of the dollar against six currencies.

What are the six currencies in DXY?

The euro (57.6%), Japanese yen (13.6%), British pound (11.9%), Canadian dollar (9.1%), Swedish krona (4.2%) and Swiss franc (3.6%). The weights have been unchanged since the euro replaced its predecessor currencies in 1999.

Why does DXY move opposite to EUR/USD?

Because the euro is 57.6% of the index and EUR/USD is quoted with the dollar second. When EUR/USD rises, the dollar is weakening against the euro, which pulls DXY down. On its own, a 1% EUR/USD rise lowers DXY by roughly 0.58%.

Is DXY the same as the trade-weighted dollar?

No. The Federal Reserve's broad trade-weighted dollar index covers many more currencies, including the Chinese yuan and Mexican peso, uses weights based on current trade, and has a base of January 2006 = 100. DXY uses a fixed six-currency basket set in the 1970s and adjusted only for the euro.

Can you trade DXY directly?

Yes, through US Dollar Index futures and options on ICE, or through a dollar index CFD if your broker offers one. CFD versions are usually priced from the futures contract and their specifications vary, so check the contract size, trading hours and financing before trading. Many traders simply watch DXY and trade individual pairs instead.

What does a DXY reading of 100 mean?

It means the dollar is at the same value against the six-currency basket as it was at the March 1973 base. Readings above 100 indicate a stronger dollar against that basket than at the base, readings below 100 a weaker one. It is not a statement about whether the dollar is fairly valued.