The US Dollar Index (DXY) Explained
The dollar index measures the greenback against six major currencies. Because gold and oil are priced in dollars, it is one of the most useful numbers to watch on any market screen.
Key takeaways
- The DXY tracks the dollar against six currencies, and the euro makes up more than half of it.
- It started at 100 in March 1973. Above 100 means the dollar is stronger than then.
- A stronger dollar tends to weigh on gold and oil prices.
- It also cuts the value of foreign sales for US multinationals.
What is in the index
| Currency | Weight |
|---|---|
| Euro (EUR) | 57.6% |
| Japanese yen (JPY) | 13.6% |
| British pound (GBP) | 11.9% |
| Canadian dollar (CAD) | 9.1% |
| Swedish krona (SEK) | 4.2% |
| Swiss franc (CHF) | 3.6% |
The weights have stayed the same since the euro replaced several European currencies in 1999. The index does not include the Chinese yuan or the Mexican peso, even though both are large US trading partners, so it is a measure of the dollar against other developed-market currencies.
How to read it
The index was set at 100 in March 1973, soon after the end of fixed exchange rates. A reading of 105 means the dollar is about 5% stronger against this basket than at the base date. Day to day, focus on the direction and size of the change rather than the level.
What moves the dollar
- Interest rate gaps: when US rates rise relative to rates in Europe or Japan, money tends to flow into dollars.
- Safe-haven demand: during global crises, investors often buy dollars and US Treasuries.
- Growth differences: a stronger US economy compared with peers tends to support the dollar.
Why it matters for gold, oil and stocks
Gold and oil. Both are priced in dollars. When the dollar strengthens, they become more expensive for buyers paying in euros, yen or rupees, which can weaken demand and prices. See How the Gold Price Is Set.
US multinationals. Large US companies earn a big share of sales abroad. When the dollar rises, those foreign sales convert into fewer dollars, which can trim reported earnings.
Emerging markets. Countries and companies that borrowed in dollars find their debt harder to repay when the dollar strengthens.
The DXY is in the live ticker at the top of every page and on our markets page under Rates & FX.
This article is general education, not personalized financial advice. Read our editorial policy and disclaimer.
