How Is DXY Calculated?
DXY is weighted mainly against the Euro (57.6%), Japanese Yen (13.6%), British Pound (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%), and Swiss Franc (3.6%).
The index was launched in 1973 at a base value of 100. DXY = 110 means the dollar has gained 10% in value against the basket since 1973.
How DXY Moves Markets
Rising DXY (strong dollar): Dollar-denominated commodities (gold, oil) become more expensive in other currencies, reducing demand and pressuring prices. Emerging market capital flows out as investors move to USD assets.
Falling DXY (weak dollar): Commodity prices tend to rise. Capital flows into emerging markets and risk assets. Countries with USD-denominated debt see borrowing costs ease.
For Turkey: A rising DXY pushes USD/TRY higher, increasing import costs and widening the current account deficit. There is a strong positive correlation between DXY and USD/TRY.