The U.S. Dollar Index
Understand the USD index (DXY) and how it affects forex pairs.
Last reviewed: 2026-03-06
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Overview
The U.S. Dollar Index (DXY) measures the dollar against a basket of six currencies: EUR, JPY, GBP, CAD, CHF, and SEK. A rising DXY typically means USD strength; a falling DXY means USD weakness. Use it to gauge overall dollar sentiment.
Dxy Basket
The DXY weights: EUR 57.6%, JPY 13.6%, GBP 11.9%, CAD 9.1%, CHF 4.2%, SEK 3.6%. EUR dominates, so DXY often moves inverse to EUR/USD. The index is calculated as a geometric average.
How To Read
DXY above 100 = dollar stronger than the basket baseline. Below 100 = weaker. Rising DXY supports USD longs in pairs like EUR/USD (short), USD/JPY (long). Falling DXY suggests USD weakness.
Trading Implications
Use DXY as a filter. If DXY is trending up, favor USD longs. If DXY is trending down, favor USD shorts. DXY can lead or confirm individual pair moves.
Limitations
DXY does not include all major currencies (no CNY, AUD). It is euro-heavy, so EUR-specific news can distort the index. Use it as context, not a sole signal.
Knowledge check
1 of 3What is the DXY?
FAQ
Common questions about this topic.
What is the DXY?
The U.S. Dollar Index (DXY) measures USD strength against a basket of six currencies: EUR, JPY, GBP, CAD, CHF, SEK.
Why does EUR have the largest weight in DXY?
The eurozone is a major US trading partner. The basket reflects trade-weighted importance. EUR at 57.6% means DXY moves heavily with EUR/USD.
How do I use DXY when trading forex?
Rising DXY = USD strength—favor USD longs. Falling DXY = USD weakness—favor USD shorts. Use it to confirm bias before entering trades.
What are DXY limitations?
DXY is euro-heavy and excludes AUD, CNY. EUR-specific news can move DXY without reflecting broad USD strength. Use with other analysis.
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Disclaimer and sources
Educational content only. Not financial advice.
Important disclaimer
Forex trading involves substantial risk of loss. This content is for educational purposes only and is not financial advice.