To be sure, the Dollar Index is not the dollar. It is not even a trade-weighted measure of the dollar. Two of America's largest trading partners, China and Mexico, are not represented. It is heavily weighted to the euro and currencies that move in its orbit, like the Swiss franc Swedish krona, and arguably the British pound. It is primarily a speculative vehicle. Very few investors or businesses have exposure that mirrors the basket. Because it is an index is often appears to trend better than the individual components and therefore may lend itself to trend following strategies. As the Great Graphic here shows, the Dollar Index has been trending higher since late September. By definition, the trend line is forged from setbacks in the Dollar Index's advance.
Marc Chandler considers the following as important: Great Graphic, USD
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