US Dollar Index – Why Use It With Forex?
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If you trade Forex, you don’t need anybody to tell you that many of the popular currency pairs are in conditions at this time that can be tough to trade.
Yes, you can emotionally trade and maybe get a winner, but for the past several weeks, finding great reasons to trade haven’t existed.
There’s been choppy price action, low volatility, momentum appearing and disappearing, and all of that combined does not make our job easier.
There is a tell-tale sign that conditions are not great and for that, we can look at the US Dollar Index.
Dollar Index – Barometer Of Stormy Trading Conditions
For those of you that are unaware, the US dollar index measures the USD against a 6 other currencies. Inside that basket, the EURUSD makes up the bulk of the measure.
The top 3 currency pairs inside the basket are:
EURO
Japanese Yen
British Pound
Those currency pairs are matched up against the USD and form the bulk of the trading activity that happens in Forex.
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