Correlation between DXY and Crypto for better profits
What is the DXY (Dollar Index)? What does it mean in correlation to cryptocurrency trading? How can you use it to your advantage?
When you trade cryptocurrencies you will hear about the DXY. But what is the DXY? And why is it important for your crypto trading?
What is DXY (Dollar Index)?
The US Dollar Index (DXY) is a measure of the value of the US dollar relative to a basket of six major foreign currencies. The index is designed to provide a snapshot of the US dollar’s performance against a basket of other currencies that are considered to be its most significant trading partners.
The DXY is widely followed by currency traders, financial analysts, and investors, who use it as a benchmark for the value of the US dollar. The index is also used to hedge against currency risks and to evaluate the performance of international investments.
Why DXY is Important and what are the relations between DXY and Crypto?
It’s worth noting that changes in the US Dollar Index can have a significant impact on the global financial markets, as a strong or weak US dollar can affect the prices of Cryptocurrencies, Commodities, Equities, DXY Bonds, and other financial instruments. A rising DXY typically indicates that the US dollar is strengthening against other major currencies, while a falling DXY suggests that the US dollar is weakening.
Examples of DXY in Crypto Trading — Economic news
Let’s dive into a small example to better understand the correlation between the DXY and the crypto market. On 19.01.2023 we had three economic announcements:
INITIAL JOBLESS CLAIMS
PHILADELPHIA MANUFACTURING INDEX
BUILDING PERMITS
The jobless claims and Philadelphia manufacturing index are positive for the DXY and building permits are negative for the DXY so overall the DXY is bullish. This means it’s negative for the crypto market.
Such announcements always come with high volatility. Another good example is the FOMC meeting from 01.02.2023.
In all cases it is important to know what you do and often it is better to stay away from the market to avoid losing money.
Crypticorn’s AI uses the economic announcements to profit from them. Crypto traders and crypto signal groups will also keep an eye on such important economic announcements.If crypto day traders don’t have an eye on such important market-moving events you shouldn’t follow their trades.