Understanding the USDX – The US Dollar Index

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The USDX is a special kind of currency indicator that is meant specially for the United States Dollar. It is a form a technical indicator that have its own chart.

What the USDX does is to indicate the strength of the US economy over other country. Its shows the relative performance of the US Dollar against all other currency pairs. The USDX chart is enabled as a currency chart on most forex brokers chart and can be also be attached into a trader’s mt4 chart as an indicator.

As the United States Dollar is the most widely traded currency on the Forex market, the USDX can be a very useful tool for traders that trade on major US dollar pairs like the EURUSD, USDCHF, GBPUSD, AUDUSD, USDCAD, NZDUSD.

One very important factor to note is that the USDX would rise or accelerate when the US Dollar is bullish or the US Economy is improving. This could be a very important trading signal for wise traders because once the USDX is buying, most other pairs would be selling especially the likes of EURUSD and GBPUSD.

In fact many experienced Forex traders use the USDX as a trading signal for the EURUSD pair, because from consistent EURUSD & USDX MT4 chart history, on any time frame, the EURUSD chart seems to be the direct opposite of the USDX chart.

This is also approximately correct for other pairs such as the GBPUSD, AUDUSD, NZDUSD.

The US Dollar Index is available as a currency chart on instaforex MT4 platform, Instatrader

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