Today we are going to be analyzing the U.S. Dollar Index.

Before we go any further, let’s take a look at what makes up the U.S. Dollar Index. The U.S. Dollar Index is a basket that consists of six foreign currencies. These are the Euro, the Yen, the Cable, the Loonie, the Krona, and the Franc. The index is made up of six currencies, but it includes seventeen countries. Japan, Great Britain, Canada, Sweden, and Switzerland are added to the twelve members of the European Union whom represent the Euro. These seventeen countries may only be a small percentage of the countries in the world, but there are many other currencies that follow the U.S. Dollar Index closely. The index is a great tool for measuring the global strength of the United States Dollar.

The components of the U. S. Dollar Index have a geometric weighted average. This is to factor in the fact that not every country is the same size, so each country is given an appropriate weight when the U.S. Dollar Index is calculated. The Euro accounts for a large portion of the U.S. Dollar Index, more than fifty percent. The other five currencies make up a combined total of forty three percent of the basket.

In this short six minute video you will see exactly how to analyze and trade the dollar index, including the exact time frames and the exact trend timing tools to use.

Enjoy the video

Last 5 posts by Jim Musselwhite

• Get a FreeWeek of Robert Prechter's Forecasts (7 Days, 4+ Letters, 100+ pages) - November 4th, 2009
• Complimentary eBook: How to Survive Deflation - October 23rd, 2009
• Earnings: Is That REALLY What's Driving The DJIA Higher? - October 22nd, 2009
• Get Your 8-Lesson 'Conquer the Crash Collection' Now! - October 21st, 2009
• Gold: What's REALLY Behind the Record Rise, Bull or Bubble? - October 20th, 2009