An index value of 120 suggests that the U.S. dollar has appreciated 20% versus the basket of currencies over the time period in question. Simply put, if the USDX goes up, meaning the U.S. dollar is gaining strength or value in comparison to the opposite currencies. Similarly, if the index is currently 80, falling 20 from its initial value, that suggests that it’s depreciated 20%. The appreciation and depreciation results are an element of the period of time in question.
The U.S. dollar index allows traders to watch the worth of the USD compared to a basket of select currencies during a single transaction. It also allows them to hedge their bets against any risks with reference to the dollar. It is possible to include futures or options strategies on the USDX. These financial products currently trade on the New York Board of Trade. Investors can use the index to hedge general currency moves or speculate. The index is additionally available indirectly as a part of exchange-traded funds (ETFs), options, or mutual funds.