There are many indexes in the stock market, such as Hang Seng Index, Dow Jones Industrial Index, and so on. Similarly, there are indexes in the foreign exchange market, that is, USDX. Because most currencies are mainly based on the exchange rate against the US dollar, the US dollar index plays an important reference role in the foreign exchange market.

the dollar index is the Geometric weighted average of the exchange rate of the dollar against six currencies. The six currencies are euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. Although the US dollar index only uses six currencies, it includes 17 major countries in the world. Because 12 countries use the euro, and many other countries' currencies follow this index closely, it is an important reference indicator for the strength and weakness of the US dollar in the foreign exchange market. However, the euro accounts for more than half of it, and sometimes the US dollar index can't clearly show the strength and weakness of other currencies except the euro. Therefore, the US Joint Committee has calculated another US dollar index, namely the Trade Weighted Dollar Index (Trade Weighted Dollar Index).

the trade-weighted dollar index can reflect the value of the dollar more accurately by comparing the competitiveness of goods in the United States and other countries. It revises the weighted proportion of countries according to the annual trade volume between the United States and other countries.