The U.S. Dollar Index (USDX) is a measure of the value of the United States dollar relative to a basket of foreign currencies.
The index is maintained and published by ICE (Intercontinental Exchange, Inc.)
It was originally was developed by the U.S. Federal Reserve in 1973 to provide an external bilateral trade-weighted average value of the U.S. dollar against global currencies. U.S. Dollar Index goes up when the U.S. dollar gains “strength” (value), compared to other currencies. The following six currencies are used to calculate the index:
Euro (EUR) 57.6% weight
Japanese yen (JPY) 13.6% 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
The USDX if utilized well by a Forex trader acts as a very good indicator both for entering and exiting USD quoted pairs. Watch this video below to learn understand it.