US Dollar IndexDXY
The US Dollar Index measures the dollar against a basket of six major currencies — the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc — with the euro carrying by far the largest weight. A rising index means a stronger dollar.
When traders say “the dollar is up”, they usually mean the US Dollar Index. It condenses the dollar's moves against six currencies into one number, which makes it a quick gauge for currency traders, commodity traders and anyone watching global markets. But its basket is old and euro-heavy, so it tells only part of the story.
- Category
- Fundamentals and Macroeconomics
- Reading time
- 4 min
- Also called
- DXY, USDX, Dollar index
- Updated
The dollar index in plain words
The index tracks the dollar against a basket of six currencies chosen in 1973: the euro area, Japan, the UK, Canada, Sweden and Switzerland.1
The euro carries 57.6% of the weight, the yen 13.6%, the pound 11.9%, the Canadian dollar 9.1%, the krona 4.2% and the Swiss franc 3.6%.1
A rising index means the dollar is strengthening against that basket. It is a geometric average calculated in real time.2
How the index works, step by step
Pick the basket
The basket is six currencies of major US trading partners, chosen as of 1973.1
Apply the weights
Each currency has a fixed weight, with the euro at 57.6%.1
Average geometrically
The index is a geometrically averaged calculation, updated every second from spot prices.2
Read the direction
A rising index means a stronger dollar against the basket; a falling index a weaker one.
Remember the euro dominates
The euro's share has stayed fixed at 57.6% since it replaced several European currencies in 1999.2
Link it to the economy
Inflation, recessions and growth in the US and the basket countries all move the index.2
Worked examples
Example 1 — Euro strengthens
Dollar ≈ 0.6% weakerThe euro rises 1% against the dollar; all other currencies are unchanged. The index starts at 100.
| Euro weight | 57.6% |
| Approximate effect | −(0.576 × 1%) ≈ −0.58% |
| New index level | ≈ 99.4 |
With the euro weighted at 57.6%, its moves dominate the index.1
Example 2 — Yen weakens
Dollar ≈ 0.3% strongerThe yen falls 2% against the dollar; nothing else moves. The index starts at 100.
| Yen weight | 13.6% |
| Approximate effect | +(0.136 × 2%) ≈ +0.27% |
| New index level | ≈ 100.3 |
The yen carries 13.6% of the basket, so a 2% yen move shifts the index far less than a 2% euro move.1
Example 3 — Missing currencies
Index unchangedThe dollar rises 5% against a currency outside the basket, while the six basket currencies are unchanged.
| Basket moves | 0% |
| Index change | 0% |
The index only covers six currencies, unlike the Federal Reserve's broad index of 26 economies.3
ICE Dollar Index vs Fed broad dollar index
| Aspect | ICE US Dollar Index | Fed broad dollar index |
|---|---|---|
| Currencies | 6 | 26 economies |
| Weights | Fixed since 1999 (euro 57.6%) | Based on trade, updated annually |
| Main use | Trading benchmark and futures | Measuring trade effects of the dollar |
| Calculation | Geometric average, real time | Geometric weighted average of changes |
How traders use the dollar index
Forex context
Shows whether a currency pair move is dollar-driven.
Commodities
Many commodities are priced in dollars, so traders watch the index.
Macro analysis
Links to Interest Rate expectations and the Federal Reserve.
Hedging and trading
Futures on the index let traders take or hedge a broad dollar view.
Advantages and disadvantages
Advantages
- One number for broad dollar strength.
- Long history for comparison.
- Traded through futures and options.
- Updated in real time.
Disadvantages
- Heavily weighted to the euro.
- Basket fixed in 1973 terms; excludes China and Mexico, for example.
- Can miss dollar moves against emerging-market currencies.
- Not a measure of the dollar's purchasing power at home.
Going deeper
Read as far as you need. Each level builds on the one before it.
Six currencies, one number
Beginner
The index tracks the dollar against six major currencies, with the euro the largest.1
What moves it
Intermediate
Common mistakes
Reading it as all currencies
Assuming it covers every US trading partner.
Ignoring the euro weight
Forgetting that EUR/USD drives most of the index.
Confusing level with value
Treating an index level as a fair value for the dollar.
Mixing up direction
Forgetting that a rising index means a stronger dollar.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- The index measures the dollar against six major currencies.
- The euro dominates with a 57.6% weight.
- Rising index = stronger dollar.
- It is a geometric average updated in real time.
- Broader indexes, like the Fed's, cover many more currencies.
Frequently asked questions
Is DXY the same as USDX?
Why does the euro have so much weight?
Does a strong dollar help US exporters?
Further learning
- Federal Reserve
Fed policy is a major dollar driver.
- Interest Rate
How rate gaps move currencies.
- Futures Contract
How the index is traded.
- Economic Indicator
Other macro gauges to read with it.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- ICE Data Indices. ICE FX Indexes methodology (opens in a new tab) Checked .
- ICE. U.S. Dollar Index futures (opens in a new tab) Checked .
- Federal Reserve Board (FEDS Notes). Revisions to the Federal Reserve Dollar Indexes (opens in a new tab) Checked .
- ICE. U.S. Dollar Index brochure (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.