The US Dollar Index is an index that measures the strength of the US dollar relative to a basket of weighted foreign currencies as shown below.
The index goes up when the US dollar gains strength against the above currencies.
The index was started in March 1973, when Bretton Woods system (the gold standard) was abandoned. The value of the Index was started at 100.000. It has its historical height of 148.124 in February 1985, and its low of 70.698 on March 16, 2008, the lowest since its inception in 1973.
The dollar index has been dropping since June 2010 and is fast approaching its November 2009 low of about 74. The faster the Federal Reserve prints the dollar, the faster the index will drop and gold price will go up.
At this moment the index is 74.717, once it breaks its neckline at around 73 the index will have a minimum target of about 60 based on its 'double tops' formation. This may affect its status as the world's reserve currency. There may be great volatility in the currency, stock and commodity markets as the dollar index slides.
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