what is the u s dollar index usdx 
the u s dollar index usdx is a measure of the value of the u s dollar relative to a basket of foreign currencies the usdx was established by the u s federal reserve in 1973 after the dissolution of the bretton woods agreement it is now maintained by ice data indices a subsidiary of the intercontinental exchange ice the six currencies included in the usdx are often referred to as america s most significant trading partners but the index has only been updated once in 1999 when the euro replaced the german mark french franc italian lira dutch guilder and belgian franc 1 consequently the index does not accurately reflect present day u s trade understanding the u s dollar index usdx the index is currently calculated by factoring in the exchange rates of six foreign currencies which include the euro eur japanese yen jpy canadian dollar cad british pound gbp swedish krona sek and swiss franc chf the euro is by far the largest component of the index making up 57 6 of the basket the weights of the rest of the currencies in the index are jpy 13 6 gbp 11 9 cad 9 1 sek 4 2 and chf 3 6 2the index started in 1973 with a base of 100 and values since then are relative to this base it was established shortly after the bretton woods agreement was dissolved as part of the agreement participating countries settled their balances in u s dollars which was used as the reserve currency while the usd was fully convertible to gold at a rate of 35 ounce an overvaluation of the usd led to concerns over the exchange rates and their link to the way in which gold was priced president richard nixon decided to temporarily suspend the gold standard at which point other countries were able to choose any exchange agreement other than the price of gold in 1973 many foreign governments chose to let their currency rates float putting an end to the agreement history of the u s dollar index usdx the u s dollar index has risen and fallen sharply throughout its history it reached an all time high in 1984 at nearly 165 its all time low was nearly 70 in 2007 over the last several years the u s dollar index has been relatively rangebound between 90 and 110 3the index is affected by macroeconomic factors including inflation deflation in the dollar and foreign currencies included in the comparable basket as well as recessions and economic growth in those countries the contents of the basket of currencies have only been changed once since the index started when the euro replaced many european currencies previously in the index in 1999 such as germany s predecessor currency the deutschemark in the coming years it is likely currencies will be replaced as the index strives to represent major u s trading partners it is likely in the future that currencies such as the chinese yuan cny and mexican peso mxn will supplant other currencies in the index due to china and mexico being major trading partners with the u s 4the usdx uses a fixed weighting scheme based on exchange rates in 1973 that heavily weights the euro as a result expect to see big moves in the fund in response to euro movements interpreting the usdxan index value of 120 suggests that the u s dollar has appreciated 20 versus the basket of currencies over the time period in question simply put if the usdx goes up that means the u s dollar is gaining strength or value when compared to the other currencies similarly if the index is currently 80 falling 20 from its initial value that implies that it has depreciated 20 the appreciation and depreciation results are a factor of the time period in question 