Dollar index (DXY)

What is the dollar index or DXY?

Updated on August 24, 2026 · by Alex

What it contains

The basket is not split evenly: the euro accounts for more than half, followed by the yen and the pound. In practice, a good part of what moves the DXY is whatever is going on between the dollar and the euro.

The composition was set in the 1970s and has barely changed since then. That is why it leaves out currencies of economies that are enormous today — the Chinese yuan, among others — which is its main limitation.

Why it matters

Because the dollar is the currency almost all of world trade is priced in, and its strength affects assets that do not look related at all.

• Commodities. Oil, gold and copper are priced in dollars. If the dollar strengthens, buying them costs more for anyone using another currency, and demand tends to fall. They usually move in the opposite direction from the DXY.
• Emerging markets. Many countries and companies borrow in dollars. A strong dollar makes that debt more expensive without them having done anything.
• US exporters. With a strong dollar, their products get more expensive abroad and their foreign sales are worth less once they are converted.

The typical mistake

Reading it as the "value" of the dollar in absolute terms. No such thing exists: an exchange rate is always relative. The DXY can rise because the dollar is strengthening or because the euro is weakening, and those are different situations with different causes.

The second mistake is forgetting which currencies are not in the basket. The DXY can be flat while the dollar moves sharply against the peso, the real or the yuan. For a Latin American investor, the DXY is a useful reference but it does not tell the whole story about their own currency.

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