The Dollar Index compares the performance of the US dollar against a basket of international currencies to determine its value. Eur / Usd, Japanese are examples of trading partners for the United States.
As it is a scale, the USD index basically works to the Ftse or NYSE, except instead of measuring the health of a stock market, it seeks to measure the value of the u.s Dollar. Intercultural Exchange Inc (ICE) calculates the index every 15 seconds and maintains and publishes it.
What is the purpose of trading the United States Dollar Index?
When the Us $ is the world's reserve currency, it is frequently traded and draws dealers from all over the world. As per the 2016-2017 BIS Biannual Central Bank Survey, it is also an excellent currency for gaining exposure to the forex market, as it featured on one side of 88 percent of FX trading in April 2016.
United States Dollar has a peculiar property enough that it tends to climb not just during periods of global market concern, but even when the United economy is doing well. As a reason, the US Dollar establishes long-term patterns that competent traders may profit from. The rest of this article describes how to trade such patterns and presents the Dollar Smile Theory, which explains why the US Dollar has trends.