What Is the US Dollar Index?

Is the dollar strong or weak? Fair question, but strong against what? It might be up on the euro, flat on the yen, and sliding against the pound, all in the same week. No single exchange rate settles it. That's what the US Dollar Index was built to solve. It takes the dollar's moves against a handful of major currencies and boils them down to one number, which traders, companies and news desks glance at all day. What follows covers what's in it, how the math works, what pushes it around, and where it falls short. Some people call it DXY, some call it USDX, and traders mostly just say the Dixie.

The whole point is to answer one question quickly: how is the dollar doing against other currencies as a group?

The index began in March 1973, not long after the Bretton Woods system of fixed exchange rates collapsed and currencies were left to float. Its starting value was 100, and everything since is measured against that. Above 100? The dollar is stronger against the basket than it was back then. Below 100? Weaker. Think of it as a thermometer for the dollar. It won't tell you why the temperature changed, but it shows which way things are heading.

So, who runs the index? Intercontinental Exchange, or ICE, designs, maintains, and publishes the index today, and the US Dollar Index is a registered trademark of theirs. It updates all the time while currency markets are open, so the number never really sits still during a trading day.

What's Inside the Basket

Only six currencies make it into the basket. Each has a fixed weight, and the weight decides how loudly that currency speaks.

Why the Euro Dominates

The euro takes up 57.6% of the whole thing, more than every other currency combined. The weights were chosen in the 1970s to match the biggest trading partners of the US, and European countries sat at the top of that list. In 1999, the euro took over from the Deutsche mark, the French franc, the Italian lira, and a few others. That was the only time the basket ever changed. So when the euro makes a big move, little else matters. The index often looks like a mirror image of the euro against the dollar.

What Is Missing

Look at who's missing. China, Mexico, South Korea, and Brazil all trade heavily with the US, yet none is in the basket, while Sweden, a far smaller economy, still has its seat. The Federal Reserve publishes its own trade-weighted dollar index with a longer list of currencies for that reason. So the DXY is better thought of as a classic yardstick than a full measure of the dollar against the entire world.

How the Index Is Calculated

The math looks intimidating on paper. The idea behind it is simple enough.

The Formula in Plain English

Technically, the index is a weighted geometric mean. Each exchange rate is raised to a power equal to its weight, and the results are multiplied together. Written out, it looks like this: DXY = 50.14348112 × EURUSD^-0.576 × USDJPY^0.136 × GBPUSD^-0.119 × USDCAD^0.091 × USDSEK^0.042 × USDCHF^0.036. That strange first number exists only to make the index equal 100 at the 1973 starting point. And the minus signs? They belong to pairs where the dollar is the second currency, like EUR/USD and GBP/USD. When the euro rises against the dollar, that exchange rate goes up, and the index goes down.

A Quick Example

Try a quick example. Suppose the euro falls 1% against the dollar and nothing else moves. The index climbs about 0.58%, because the euro carries a 57.6% weight. As a real snapshot, the index was near 102 in late October 2026. That's about 2% above its 1973 base and roughly 4% higher than where the year began. A single reading doesn't say much, though. The direction of travel says far more.

What Moves the Dollar Index

Anything that moves the dollar against the euro, yen, pound, and the others will move the index. Some causes keep coming back.

Interest Rates and Data

Higher US interest rates pull money toward dollar assets, and that lifts the dollar. Strong jobs or inflation numbers can push rate expectations up. Weak numbers do the reverse.

Safe Haven Demand

When people get scared, they tend to buy dollars, and the index usually rises. When confidence returns, and investors go hunting for riskier bets, the index often drifts lower.

Moves in the Other Currencies

The dollar is only half of every exchange rate, so news elsewhere counts too. A firm message from the European Central Bank can lift the euro and drag the index down, even if nothing happened in the US.

Highs and Lows: The Index in Context

A stock index tends to climb over the years. The dollar index doesn't. It moves in long, wide cycles, and some of them last for years.

Those swings stretch over decades, which means one year of gains or losses barely shows up on the long chart. It also explains why a reading of 102 and a reading of 90 can both seem normal, depending on the era.

How People Use the Dollar Index

Hardly anyone buys the index directly. Mostly it works like a dashboard.

As a Gauge

Analysts, companies and news outlets use it for a quick read on the dollar's mood. It also helps explain what's happening elsewhere, since gold, oil and emerging market currencies often react when the dollar swings.

Trading It

Futures on the index trade on ICE for about 21 hours a day and expire every March, June, September, and December. Brokers also offer it as CFDs, and a few funds track it. None of this is financial advice, and leveraged products can lose money quickly.

DXY in Short

The US Dollar Index turns the dollar's performance against six major currencies into one easy number. Its recipe is old, heavy on the euro and light on newer trading partners, yet it's still one of the most watched gauges around. Once the basket and the formula make sense, headlines about a strong or weak dollar get a lot easier to read.

More About the Dollar Index

What does the US Dollar Index measure?

How strong the dollar is against a basket of six major currencies, namely the euro, yen, pound, Canadian dollar, Swedish krona, and Swiss franc.

What does a reading above 100 mean?

The dollar is stronger against the basket than it was in 1973, the starting point. Below 100 means weaker.

Why is the euro so important in the index?

Its weight is 57.6%. When the index was designed, European countries ranked among the largest trading partners of the US.

Does the index cover every currency?

No. Big trading partners like China and Mexico aren't included, so it only shows part of the picture.

Can you trade the US Dollar Index?

Yes. ICE futures, broker CFDs, and some funds all offer it, and each one carries risk.