U.S. Dollar Index (DXY) at crucial point. What's the next move ?

Oct 13, 2022

The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to a basket of foreign currencies. The USDX was established by the U.S. Federal Reserve in 1973 after the dissolution of the Bretton Woods Agreement. It is now maintained by ICE Data Indices, a subsidiary of the Intercontinental Exchange (ICE).

The index is currently calculated by factoring in the exchange rates of six foreign currencies, which include the euro (EUR), Japanese yen (JPY), Canadian dollar (CAD), British pound (GBP), Swedish krona (SEK), and Swiss franc (CHF).

The Dollar index also impacts the inflationary trend in India. Though the Indian Rupee is not included in the index, changes in the dollar's index relative to other currencies have an impact on the Indian economy. An increase in the Dollar index makes the dollar strong and depreciates the value of the INR.

A weakened rupee makes imports costlier and impacts India Inc.’s profitability due to increased production costs. Increased costs lead to inflation, and the prices of goods and services rise, much to the detriment of consumers. Thus, the overall GDP (Gross Domestic Product) is impacted and suffers a slowdown when the dollar strengthens.

* 15 Year cycle is progressing.

* Trading withing rising channel.

* Arc 1 breakout around July, 2014.

* Arc 2 breakout around March, 2022.

* Trading near it's resistance (Resistance 5).