What is the US Dollar Index? One number for the dollar's strength
By SendPay Business · · 2 min read
The US Dollar Index, often shown by its ticker DXY, measures the dollar against a basket of six major currencies. When the index rises, the dollar has strengthened against that basket; when it falls, the dollar has weakened.
The six currencies
- Euro, which makes up by far the largest share, about 58%.
- Japanese yen.
- British pound.
- Canadian dollar.
- Swedish krona.
- Swiss franc.
How it started
The index began in 1973 with a starting value of 100, soon after the end of fixed exchange rates. A reading of 105 means the dollar is about 5% stronger against the basket than at that start.
What moves it
US interest rates, inflation, jobs data and global risk mood all play a part. In times of stress, money often flows into the dollar, which can push the index up.
The limits
The basket leaves out big US trading partners such as China and Mexico, and it is weighted heavily to the euro. So it is a good guide to the dollar against Europe, but a rougher one against the rest of the world.
Where SendPay fits
SendPay platforms let customers hold GBP, EUR and USD and exchange between them at a fee the platform owner sets, powered by licensed partners. SendPay doesn't offer trading.
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Build my platform →Questions people ask
How is the dollar index worked out?
Enter the six exchange rates into the free calculator.
US Dollar Index calculator →What is a reserve currency?
A currency central banks hold in large amounts, led by the dollar.
Reserve currencies →How do interest rates affect exchange rates?
Higher rates can attract money into a currency and push it up.
Interest rates and FX →What is Non-Farm Payrolls?
The monthly US jobs report that often moves the dollar.
Non-Farm Payrolls →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.