Hi everyone! I know that Dollar index corelates with EUR and other major currency pairs but it can not be used to predict currency movement just because it happens almost simultaneously. What other ways DXY can be used effectively for trading ? Thanks in advance
DX futures is like any other futures instrument, take advantage of leverage for one, I disagree of predictive value as I do very long term holding of currencies, staying in positions years going for larger profits and hedging when possible, except with DX. Think in terms of relationships or spreads to determine directions or when one is slower than other. i.e. June 11 & 4 between DX and Euro on dailies, one breaks out further than the other, and retracements are different. Either program backtest this formation or manually couple decades to get clearer understanding of what the past happened. Many will say can't use past to trade future, guess they flip a coin.
DXY is a relic. Bloomberg's Dollar Index is more representative of current, not 1973, trading partners for instance China and India are included Sweden is not and the Euro represents about 1/3 not more than 1/2 of the index's calculated value. But unfortunately you need a Bloomberg terminal to follow along.