The US Dollar Index (DXY)

What Is the US Dollar Index?

The US Dollar Index, universally called DXY (sometimes styled USDX), is a single number that summarizes the dollar's value relative to a fixed basket of six foreign currencies. Think of it like a report card for the dollar — one score that collapses dozens of bilateral exchange rates into a headline figure. It was created by the Federal Reserve in 1973, shortly after the collapse of the Bretton Woods system that had pegged most currencies to the dollar, and it has been maintained by ICE Futures U.S. ever since.

The index is calculated in real time during trading hours and is quoted as a level, not a percentage. A level of 100 is the conventional baseline — the index was set to exactly 100 at its launch in March 1973. When DXY is above 100, the dollar is stronger than it was at that starting point; when it is below 100, it is weaker. Traders typically watch the distance from 100 less than they watch the direction and speed of change, which is why percentage-change columns (day, week, YTD, year-on-year) are often more useful than the raw level.

The Six-Currency Basket and How It Is Weighted

DXY does not treat all currencies equally. Each of the six currencies in the basket carries a specific weight, determined by its historical share of US trade flows. The weights have not changed since 1999, when the euro replaced several legacy European currencies. Here is how the basket breaks down:

The euro's dominant share means that DXY and the EUR/USD currency pair move in almost perfect mirror image. When EUR/USD rises — meaning the euro is strengthening against the dollar — DXY almost always falls, and vice versa. Understanding this relationship helps explain why most of DXY's daily swings can be traced directly to news out of the eurozone or the European Central Bank.

How the Index Is Calculated

DXY uses a geometric weighted average, not a simple arithmetic average. Without getting deep into the mathematics, this method multiplies each exchange rate raised to the power of its weight, then chains them together. The practical implication is that a 1% move in the euro affects the index about four times more than a 1% move in the Swedish krona, purely because of the difference in weight.

Because the basket is fixed and the weights never change, DXY is easy to compare across time — there is no rebalancing or reshuffling that could distort a long-run chart the way a stock index reshuffle might. That stability is a feature for historical analysis, but it is also one of the index's central criticisms, as discussed below.

Why DXY Matters Beyond the FX Market

DXY would just be a currency trader's tool if its effects stopped at the foreign exchange market. But dollar strength ripples through virtually every other asset class, which is why the index appears on the screens of commodity traders, bond investors, and emerging-market analysts alike.

Commodities Priced in Dollars

Most globally traded commodities — crude oil, gold, copper, wheat — are priced in US dollars by convention. When the dollar strengthens (DXY rises), the same commodity costs more in local currency for buyers outside the US, which tends to dampen demand. Historically, markets have observed a negative correlation between DXY and dollar-denominated commodity prices: a strong dollar often coincides with weaker commodity prices, and a weak dollar often coincides with stronger ones. This is not an iron law — supply shocks can overwhelm the currency effect — but it is one of the most watched relationships in global markets.

Gold is perhaps the clearest example. Precious metals traders routinely glance at DXY alongside the gold price, because a surging dollar can act as a headwind for gold even when other conditions look supportive. You can explore this relationship further in our gold guide.

Emerging-Market Borrowers

Many governments and companies in emerging markets borrow money by issuing debt denominated in US dollars. When DXY rises, those borrowers face a double pressure: their local currency buys fewer dollars, so the real cost of repaying dollar-denominated debt increases even if interest rates have not moved. Economists read a sharply rising DXY as a potential stress signal for countries with large dollar debt loads, because it tightens financial conditions globally without any central bank having to lift a finger.

Risk Sentiment and Safe-Haven Flows

The dollar is considered a safe-haven currency. During periods of global stress — financial crises, geopolitical shocks, sudden recessions — investors and institutions often rush into dollars, pushing DXY higher. This is part of a broader pattern described in risk-on, risk-off dynamics: when fear rises, the dollar tends to strengthen; when confidence returns, it can soften. Watching DXY direction is therefore one way analysts gauge the mood of global markets in real time.

Reading DXY Data: Levels vs. Changes

The raw DXY level is less meaningful in isolation than how it is moving. A reading of 104 tells you the dollar is stronger than its 1973 baseline, but it does not tell you whether it has been rising or falling lately, which is the part that moves markets. This is why the percentage-change columns — day, week, month, year-to-date, and year-on-year — carry more analytical weight than the number itself. You can find those columns live on our currencies page and learn how to interpret them in the guide to reading percentage moves.

Futures contracts on DXY also trade actively, allowing market participants to take positions on where the index might go. The front-month futures contract is widely followed as a real-time proxy for spot DXY. If you are unfamiliar with how futures work alongside spot prices, the guide on spot vs. futures prices is a useful foundation.

The Limitations of DXY

DXY is genuinely useful, but it has well-known blind spots that analysts are careful to flag.

• Heavily European. With the euro, pound, Swedish krona, and Swiss franc accounting for roughly three-quarters of the basket, DXY is really more of a "dollar vs. Europe" index than a true global measure. A dollar that is weakening sharply against the Chinese yuan or the Indian rupee might barely register in DXY if European currencies are stable.
• No emerging-market currencies. China, India, Brazil, South Korea, and Mexico — some of the largest US trading partners — are completely absent. The index weights predate the dramatic rise of these economies in global trade.
• Frozen in 1999. The composition has not changed since the euro was introduced. The world's trade patterns have shifted significantly since then, meaning DXY's weights are increasingly historical artifacts.
• Not the only dollar index. The Federal Reserve publishes its own broader dollar indexes — including a trade-weighted index that does include emerging-market currencies — which some economists prefer for macroeconomic analysis. DXY, however, remains the most quoted in financial markets because it is simple, liquid, and has decades of price history.

Understanding what moves exchange rates in the first place — interest rate differentials, inflation, trade flows, and central bank policy — helps put DXY movements in context. The guide on what moves exchange rates covers those drivers in depth.

Where to Track DXY

Live DXY data, along with the individual currency pairs that compose it, is available on our currencies page. The economic calendar flags scheduled events — Federal Reserve decisions, eurozone inflation releases, US jobs reports — that historically produce the largest single-day moves in DXY. Tracking those events alongside the index level is the standard way analysts connect the macro story to the price action.