US DOLLAR INDEX Forecast and News


US Dollar Index regains the smile and climbs to daily highs near 105.70

The greenback manages to regain some balance and lifts the US Dollar Index (DXY) back to the 105.70 region on turnaround Tuesday.

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EUR/USD turns south towards 1.0200 amid risk-aversion

EUR/USD turns south towards 1.0200 amid risk-aversion

EUR/USD is heading south towards 1.0200 in early Europe, as bulls failed to keep reins near the monthly high. Mounting US-China tensions over Taiwan and recession fears weigh on risk sentiment and help the dollar find demand as a safe haven.

EUR/USD News

GBP/USD tests 1.2200 as risk-off flows dominate

GBP/USD tests 1.2200 as risk-off flows dominate

GBP/USD is trading deep in red near 1.2200, as investors turn away from higher-yielding assets such as the GBP. Despite falling US Treasury bond yields, the dollar manages to gather strength amid risk aversion. US Pelosi's visit to Taiwan is the main event risk this Tuesday. 

GBP/USD News

USD/JPY finds support near 130.40 on Japanese jaw-boning

USD/JPY finds support near 130.40 on Japanese jaw-boning

USD/JPY is rebounding towards 131.00, having found support near 130.40 after the Japanese Finance Minister expressed concerns about the rapid moves in the yen. Risk-aversion combined with the sell-off in the US dollar and yields keep the downside intact in the pair. 

USD/JPY News

Gold bulls keep their sight on $1,786 amid Taiwan tensions

Gold bulls keep their sight on $1,786 amid Taiwan tensions

Gold price eases but upside remains favored amid escalating US-China tensions. The expected visit of US’ Pelosi to Taipei rattles markets amid China warnings. Gold bulls remain on track to test the critical resistance area at $1,786.

Gold News

WTI: Sellers in the driving seat around $93.00

WTI: Sellers in the driving seat around $93.00

WTI crude oil prices remain depressed after breaking the one-month-old symmetrical triangle to the south. That said, the black gold holds lower ground near $93.00, the lowest levels in two weeks, during Tuesday’s Asian session. Given the bearish MACD signals joining the triangle’s breakdown, the commodity prices are likely to decline further.

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DOLLAR INDEX, USDX

The U.S. Dollar Index (USDX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies. These currencies are the Euro (constituting 57.6% of the weighting), Japanese Yen (13.6%), British Pound (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%) and Swiss Franc (3.6%). The index started in 1973 -with the absolution of Bretton Woods- with a base of 100.000, and values since then are relative to this base. For example, if the current reading says 99.800, this means that the dollar has fallen 0.2% since the start of the index (99.800 - 100.000).
Being the Dollar Index a geometrically weighted index and not a trade-weighted one, it is too concentrated in Europe and does not include two of the U.S. top four trading partners Mexico and China. It does not appear to be used by corporates or many asset managers, like mutual funds, insurance companies, and endowments. It is primarily a speculative vehicle. It's also important to acknowledge that a geometric mean artificially lowers the value of the USD over time.

ORGANIZATIONS, PEOPLE AND ECONOMIC DATA THAT INFLUENCE DOLLAR INDEX

The US Dollar Index news can be seriously affected by the decisions taken by these organizations and people:

  • Fed, the Federal Reserve of the United States whose president is Jerome Powell. The Fed controls the monetary policy, through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis.
  • The US Government: events as administration statements, budget, new laws and regulations or fiscal policy can increase or decrease the value of the Dollar Index.
  • The US Treasury Dept that defines its role as “the steward of U.S. economic and financial systems, and as an influential participant in the world economy.”
  • US GDP (Gross Domestic Product), the total market value of all final goods and services produced in the United States of America. It is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Generally speaking, a high reading or a better than expected number is seen as positive for the Dollar Index, while a low reading is negative.

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The US Dollar Index

When I write the Online Trading Academy Forex newsletter, I give my opinion about what I believe is happening to the currencies of the world based on the news I hear, the experts I follow, and my personal experiences of the economic cycles I have seen in the past. This fundamental information helps me understand what reports and indicators the economists of the world believe will shape future events.

A Look at the US Dollar Index

Over the last few months especially, there’s been a lot of focus in the world of Currency Trading upon the state of the US Dollar. No matter what your opinion is of the Greenback, it is still, without question, regarded as the world’s primary reserve currency and holds its weight of recognition across the board.