The dollar index, or “US Dollar Index Dollar Index”, means the ratio of the US currency against the currencies of other countries.
The most popular dollar index – USDX, is formed by the New York Chamber of Commerce and shows the dollar’s relationship to the following six currencies, the euro, the Japanese yen, the Swiss franc, the Canadian dollar, the Swedish crown, and the British pound. Currencies have different shares in the basket, so the dollar index is calculated as a weighted average of the six currencies’ prices.
The largest share of the euro – 50%. The USDX indicator is often used by traders as an indicator for technical analysis.
After Jerome Powell recently stated that he is inclined to support an interest rate increase of 25 basis points at the monetary policy meeting in March, from 25 basis points.
In one or more meetings, if inflation does not decline later this year as expected, these statements came as a savior for the US dollar, which has turned into one of the safe havens for investors during this crisis, as a result of which the dollar index rose to 100
The dollar index maintained its recent advance above 99 on Tuesday, hovering above levels last seen in May 2020, and benefited from haven flows, as investors continued to assess the geopolitical and economic uncertainties surrounding the Russia-Ukraine war.
The conflict in Ukraine showed no signs of de-escalation and continued to disrupt global markets.
This has pushed up commodity prices, fueling inflation and growth fears, posing new challenges for central banks, and investors are now awaiting the US inflation report due on Thursday which is expected to hit a multi-decade high of 7.9% in February.
why the dollar is the strongest curreny in the world The US dollar is considered the official currency of the United States of America and is one of the most influential and widely used currencies globally.
Exchange rates represent the value that reflects how much one currency can be traded for another. In other words, they show how many units of the local currency are needed to obtain one unit of a foreign currency.