Guide · Markets

The US Dollar Index (DXY): What It Measures and Why Every Market Watches It

The dollar index tracks the US dollar against six major currencies, and the euro alone is more than half of it. Here is how it is built, what moves it, and what its slide from a one-year high in October 2026 meant for gold, oil and stocks.

Oct 16, 2026

When a market report says "the dollar fell", it usually means the US Dollar Index, known by its ticker DXY. It measures the dollar against a fixed basket of six currencies, with March 1973 set at 100 — the moment the major currencies began floating freely. A reading of 102 means the dollar buys about 2% more of that basket than it did then.

The basket is lopsided. The euro carries a 57.6% weight, the Japanese yen 13.6%, the British pound 11.9%, the Canadian dollar 9.1%, the Swedish krona 4.2% and the Swiss franc 3.6%. The weights have not changed since the euro replaced its predecessor currencies in 1999, and there is no Chinese yuan or Mexican peso in it. In practice, DXY is mostly a mirror image of EUR/USD: when the euro rises against the dollar, the index almost always falls.

What moves it is, above all, the gap between US interest rates and everyone else's. Higher US yields attract money into dollar assets; when traders start to expect the Federal Reserve to be less aggressive than other central banks, the dollar tends to weaken. Risk appetite matters too: in a global sell-off, investors often buy dollars as a safe place to wait.

October 2026 shows both forces at work. On October 12 the index closed at 102.58, its highest level in a year, after a September Fed hike and a run of firm US inflation data, while EUR/USD sank to about 1.116, its lowest in twelve months. Three days later, retail sales came in weak once gasoline was excluded and Treasury yields dropped: the 10-year fell to 5.09%. The index lost 0.54% to 102.00 that day and slipped to about 101.7 on the morning of October 16, with the euro back above $1.126 and the pound up 0.8% to $1.334. The year had started at 98.28; the low, 96.22, came on January 27.

Why it matters beyond currency trading: gold, oil and most commodities are priced in dollars, so a weaker dollar makes them cheaper for everyone else and tends to lift their prices. On the same October 15 that the index fell 0.54%, gold futures rose 1.5% and silver 2.3%. US multinationals earn part of their revenue abroad, which is worth more in dollars when the dollar is weak, and emerging-market borrowers with dollar debt get some relief.

Two limits to keep in mind. Because the euro dominates, DXY can say little about the dollar against the currencies of America's biggest trading partners in Asia and Latin America; the Fed's own broad trade-weighted index covers those. And a one-day move of half a percent is large for the index but small for a single stock: currency markets move less, which is why forex traders use leverage — and why its risks deserve respect.