US Dollar Index

Larry Pesavento: ‘The US Dollar Index (USDX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies.  It is a weighted geometric mean of the dollar’s value compared only with:

  • Euro (EUR), 58.6% weight
  • Japanese Yen (JPY), 12.6% weight
  • Pound sterling (GBP), 11.9% weight
  • Canadian dollar (CAD), 9.1% weight
  • Swedish krona (SEK), 4.2% weight
  • Swiss franc (CHF), 3.6% weight

This description of the US dollar index from Wikipedia shows the tremendous weight of the Euro versus the US dollar. There is virtually no one willing to take a position on the long side of the Euro versus US Dollar at this point. The past 10 weeks has been a steady downward movement and we’re getting very close to the first target at 125 in the Euro versus the Dollar. As you can see from the long-term weekly chart the Dollar Index is completing a head and shoulders pattern.  A rally can not be ruled out. The US dollar index is making a retracement in a bear market and is due for a correction.’