- Trading
- Trading
- Markets
- Markets
- Products
- Forex
- Commodities
- Metals
- Indices
- Shares
- Cryptocurrencies
- Treasuries
- ETFs
- Accounts
- Accounts
- Compare our accounts
- Open account
- Try free demo
- GO Markets Social
- Platforms & tools
- Platforms & tools
- Platforms
- Platforms
- Platforms overview
- MetaTrader 4
- MetaTrader 5
- Mobile trading platforms
- Premium trading tools
- Premium trading tools
- Tools overview
- VPS
- Genesis
- Education
- Education
- Resources
- Resources
- News & analysis
- Education hub
- Economic calendar
- Earnings announcements
- Help & support
- Help & support
- About
- About
- About GO Markets
- Our awards
- Sponsorships
- Client support
- Client support
- Contact us
- FAQs
- Quick support
- Holiday trading hours
- Maintenance Schedule
- Fraud and scam awareness
- Legal documents
- Trading
- Trading
- Markets
- Markets
- Products
- Forex
- Commodities
- Metals
- Indices
- Shares
- Cryptocurrencies
- Treasuries
- ETFs
- Accounts
- Accounts
- Compare our accounts
- Open account
- Try free demo
- GO Markets Social
- Platforms & tools
- Platforms & tools
- Platforms
- Platforms
- Platforms overview
- MetaTrader 4
- MetaTrader 5
- Mobile trading platforms
- Premium trading tools
- Premium trading tools
- Tools overview
- VPS
- Genesis
- Education
- Education
- Resources
- Resources
- News & analysis
- Education hub
- Economic calendar
- Earnings announcements
- Help & support
- Help & support
- About
- About
- About GO Markets
- Our awards
- Sponsorships
- Client support
- Client support
- Contact us
- FAQs
- Quick support
- Holiday trading hours
- Maintenance Schedule
- Fraud and scam awareness
- Legal documents
- Home
- News & Analysis
- Forex
- How to trade the US Dollar Index
- Plan your trades
- Manage your risk
News & AnalysisThe US Dollar Index (DXY) is a popular tool used by forex traders to assess the value of the US dollar relative to a basket of other major currencies. The DXY is calculated using the weighted average of six major currencies: the euro, yen, pound sterling, Canadian dollar, Swedish krona, and Swiss franc.
To use the DXY to trade forex, you can follow these steps:
1. Monitor the DXY:
Keep an eye on the movements of the DXY to get a sense of the overall strength or weakness of the US dollar. You can use technical analysis tools, such as moving averages or trend lines, to identify the direction of the trend.
2. Analyse currency pairs
Look for forex pairs that are inversely correlated to the DXY. This means that when the DXY goes up, the currency pair goes down, and vice versa. For example, the EUR/USD pair is negatively correlated to the DXY, which means that as the DXY goes up, the EUR/USD pair goes down.Once you have identified a currency pair that is inversely correlated to the DXY, you can plan your trades accordingly. For example, if the DXY is showing signs of weakness, you may want to consider going long on a negatively correlated currency pair, such as the EUR/USD.
As with any trading strategy, it’s important to manage your risk when using the DXY to trade forex. Make sure to use stop-loss orders to limit your losses in case the market moves against you.
Currency pairs may be influenced by other factors besides the DXY, which may not be a perfect indicator of the US dollar’s value. To make informed trading decisions, it is important to combine the DXY with other technical and fundamental analysis tools.
Ready to start trading?
Disclaimer: Articles are from GO Markets analysts and contributors and are based on their independent analysis or personal experiences. Views, opinions or trading styles expressed are their own, and should not be taken as either representative of or shared by GO Markets. Advice, if any, is of a ‘general’ nature and not based on your personal objectives, financial situation or needs. Consider how appropriate the advice, if any, is to your objectives, financial situation and needs, before acting on the advice. If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.
Next Article
XAUUSD, GBPUSD, EURUSD Analysis 13-17 March 2023
XAUUSD Analysis 13-17 March 2023 The gold price outlook remains positive in the short and medium term. As the price of gold rested above the 1800 support level before making a strong rally and breaking above the 1880 level as a result of the increased demand for gold as a safe haven over the weekend. come After the collapse of Silicon Valley...
March 15, 2023Read More >Previous Article
Bank of Canada keeps interest rates at 4.50%
This week, the Bank of Canada (BoC) released its decision to hold interest rates at the current level of 4.50%. In the rate statement, the BoC indicat...
March 10, 2023Read More >