There are a lot of trading tools that can help increase any investor’s chances of success. Both traders and global market observers use these tools on a regular basis to help make predictions and invest wisely. The USD Index is a tool that helps users better understand the current state of the market. It indicates the current standing of the United States dollar, as indicated in its name, and is heavily relied upon by forex and binary option traders to give them an accurate and up-to-date analysis of the dollar’s value. The tool can also be used to learn about the history of the value of the dollar over time, which can be useful when making predictions about where it might go.
About the Index
The USD Index tool, or USDX, was created in 1973. It’s used to compare the value of the dollar against other currencies. Specifically, it compares the USD to the Japanese yen, the euro, the Swedish krona, the Canadian dollar, the pound sterling, and the Swiss franc. These currencies make up what is commonly referred to as “the basket,” and came together back in 1973 to agree that their currencies would be used to calculate the US dollar’s relative value.
How Does It Work?
The USD Index is essentially a graph that shows how the USD moves over time, going all the way back to the tool’s creation in March of 1973. This calculation occurs 24 hours a day, five days a week. On the graph, the value increases when the USD gains value against the other currencies in the basket, and decreases when the USD loses value. The graph uses a base of 100, meaning 110 indicates a 10 percent increase, and 80 indicates a 20 percent decrease.
In total, the basket contains 22 countries, 17 of which use the euro. Because the value of the USD affects every country, regardless of whether or not it’s in the basket, the USD Index is watched by countless people around the world. This makes it a crucial trading tool for investors everywhere.
