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Killer Whale Fundamental Analysis: Understanding the DXY

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Hey everyone this is Tony from Killer Whale Crypto, and today we’re going to discuss the Dollar Strength Index, or DXY!

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But that’s enough of that! On to the DXY!

The DXY, or U.S. Dollar strength Index is a measure of the value of the U.S. Dollar in relative comparison to six other non-US fiat currencies. These are the currencies that make up the DXY based on percentage. Although these six currencies make up the DXY, they are subject to future revision. For example, both Sweden and Switzerland are smaller global trading partners than China, Mexico, South Korea, and Brazil. That being said, we might eventually see one or more of the currencies of these countries being added to the DXY or replacing the Franc or Krona in the future.

Let’s take a look at where the DXY came from!

The DXY is maintained by the Intercontinental Exchange Commission, and was created to replace the Bretton Woods unified fixed rate system, which was shared between the allied nations, and formed shortly after the second world war. By 1985, the DXY hit its all-time high of 162 dollars and 72 cents: a price that it is very unlikely to reach again. The DXY hit it’s all time low of 70 dollars and 57 cents during the historic stock market crash of 2008.

Now that we know what the DXY is and where it came from, lets discuss what effects the DXY.

Although the media can affect all assets, it has a particularly strong effect on the price of the DXY. When the US dollar is mentioned on television, the DXY tends to rise. When the media covers dollar negative news, such as US war casualties, the DXY tends to lose value.

Before we rap this up, let’s look at one more interesting aspect of the DXY.

When the DXY rises, it pushes USD base pairs higher and USD quote pairs lower. When You have a USD base pair with a currency that is used to measure the DXY, that pair will move with the DXY. USD quote pairs on the other hand will move in the opposite direction of the DXY. Lastly, since the Euro makes up almost 60 percent of the DXY currency basket, the DXY has a directly inverse correlation with the strength of the Euro in comparison to the US dollar.

That’s all we have time for today friends! Hopefully this video gave you a better understanding of the DXY. If it did, please remember to like and subscribe to our channel. If you think this video could be informative for someone else, don’t hesitate to give it a share!

Thank you so much for discussing the DXY with us!

Killer Whale Crypto

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