The US Dollar Index (DXY) measures the value of the US dollar relative to a weighted basket of six major foreign currencies: the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona, and Swiss Franc. The euro carries the heaviest weighting at approximately 57.6%, making EUR/USD movements the primary driver of the index. Traders and investors use the DXY as a gauge of overall USD strength, and it is closely watched during Federal Reserve policy decisions and major economic releases.
Example
“The Dollar Index surged above 105 after the Federal Reserve signaled more aggressive rate hikes, strengthening the USD against all major currencies.”