The U.S. Dollar Index (USDX, DXY, DX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners’ currencies. The Index goes up when the U.S. dollar gains “strength” (value) when compared to other currencies.

It is a weighted geometric mean of the dollar’s value relative to following select currencies:

  • 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 strength or weakness of this value has implications on all those products or instruments denominated in US dollars. Consequently, commodities such as industrial metals, will have an impact on the sector in our specific case.

Analyzing the chart on a weekly basis (USNDX expiring December 2019) it is possible to observe the current formation of a bearish pattern called “Double Top”, with its “neck line” in transit just in area 97.60. Prices below these levels will send a confirmation signal of the completion of the bearish figure (Double Top) which proposes as first flexion targets in the 96 and 95.30 area (lows of June 2019).

If this were to happen it could be decisive for the recovery of the industrial metals sector, with a re-launch of copper and the whole specific sector.

DOLLAR INDEX WEEKLY (DEC-19 CONTRACT)