The U.S. Dollar Index (DXY) measures the value of the U.S. dollar relative to a basket of six major foreign currencies: the Euro (57.6%), Japanese Yen (13.6%), British Pound (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%), and Swiss Franc (3.6%).

Why It Matters

DXY is the most widely referenced indicator of overall dollar strength. Since the dollar is the world's reserve currency and the primary medium for international trade, its value affects:

Market Impact

A rising DXY generally means the dollar is strengthening, which tends to pressure commodity prices (especially gold and oil), hurt emerging market currencies, and make U.S. exports more expensive. A falling DXY does the opposite—boosting commodities and emerging markets.

Fed Policy Connection

The dollar typically strengthens when the Fed is raising rates (attracting capital seeking higher yields) and weakens during easing cycles.