US Dollar Index measures the ability of the US dollar to perform against a variety of currencies. Currency is measured against the dollar include the Euro, Yen, Sterling, Canadian dollar, Swiss from, and Swedish Krona.

Dollar Index traders simply look to the overall index as a barometer for the market, and then take advantage of diverging price behavior from one currency’s response to the dollar.

This is a challenging way to play the market because it requires a advance knowledge of market behavior, and keen sense of market dynamics, and ability to manage the news feed on a variety of pairs.