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RoboForex - www.roboforex.com
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[QUOTE="Vlad RF, post: 194323, member: 61796"] [B][SIZE=5]How to Use the US Dollar Index (DXY) in Forex Trading?[/SIZE][/B] [I]Author: Victor Gryazin[/I] [CENTER][IMG]https://roboforex.com/uploads/img/news/main/roboforex-header.jpg[/IMG] [B]Dear Clients and Partners,[/B][/CENTER] In this article, you’ll be introduced to the US Dollar index, which shows dynamic patterns of the American currency and helps to find additional signals for Forex trading. [SIZE=5]What is the US Dollar index?[/SIZE] The US Dollar index (DXY or USDX) is an aggregated indicator of the leading global currency cost relative to a basket of other foreign currencies. Technically, the index can be compared with stock indices, such as Dow Jones or S&P 500. Stock indices track the stock market, while DXY shows the USD rate relative to other currencies and its current calculated value. The US Dollar index started trading in 1973, soon after the dismantling of the Bretton Woods system. Its base value was 100.00. For example, if the index grows up to 110.00, it means that the value of the dollar increased by 10% relative to its base value. Starting from 1973, the index’s high was 160.00, while the year 2008 showed an all-time low at 70.00. Apart from the major USD Dollar index, there are other indices: the Bloomberg dollar index, the Wall Street Journal dollar index, etc. All of them are be highly correlated to each other and measures the same thing (the US dollar value) but their calculation formulae are quite different, that’s why they show pretty close but not always the same results. In this article, we’ll talk about the major and classic US Dollar index (DXY). However, the basic idea of any other US Dollar index will be pretty similar. [IMG]https://blog.roboforex.com/wp-content/uploads/2021/04/dxy-1093x630.png[/IMG] [SIZE=5]How to use the US Dollar index in Forex trading?[/SIZE] The US Dollar index is traded on exchanges in the form of non-deliverable contracts – futures and options, but it can also be used for trading on Forex because the USD is a part of major currency pairs. The DXY chart can be found on different analytical resources, for example, tradingview.com. let’s consider three ways of using the US Dollar index of Forex trading: The US Dollar trend indicator The US Dollar index is the key indicator that one should pay attention to when trying to define the current dollar tendency. As one can learn from the technical analysis course, “trend is our friend” and it is better to open orders in the direction of an active tendency. So, it is necessary to open the US Dollar index chart and define the current trend direction. [SIZE=5]Closing thoughts[/SIZE] The US Dollar index is a very important macroeconomic indicator that reflects the current dynamics of the American currency relative to its base value of 100.00. The index movement is closely watched by many traders, analysts, and economic experts. DXY can be used for defining the current tendency in the US Dollar and finding trading signals on Forex. For trading, one can use significant support and resistance levels, price patterns, Price Action patterns. [URL=https://blog.roboforex.com/blog/2021/04/15/how-to-use-the-us-dollar-index-in-forex-trading/?utm_source=earnforex.com&utm_medium=cpc&utm_campaign=rf_en_external_forums_blog&utm_content=text]Read more at R Blog - RoboForex[/URL] [B]Sincerely, RoboForex team[/B] [/QUOTE]
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