What you will learn in this lesson
In this lesson you will learn exactly what the US Dollar Index (DXY) measures, which six currencies make it up, what it means when it rises or falls, why it usually moves opposite to the global gold ounce, and how that relationship reaches the price of gold and coins in Iran's market.
Definitions
The Dollar Index (DXY) is a number that measures the US dollar's strength not against one currency, but against a basket of six major currencies. Launched in 1973, after the collapse of the Bretton Woods system, as a benchmark for the dollar against the currencies of America's main trading partners, it is calculated and published today by ICE (Intercontinental Exchange).
The six currency weights that make up DXY are: the Euro (EUR) at 57.6 percent, the Japanese yen (JPY) at 13.6 percent, the British pound (GBP) at 11.9 percent, the Canadian dollar (CAD) at 9.1 percent, the Swedish krona (SEK) at 4.2 percent, and the Swiss franc (CHF) at 3.6 percent. As you can see, more than half the index's weight belongs to the euro alone, which is why the euro/dollar rate is by far the single biggest driver of DXY on an ordinary trading day.
One important note: DXY is not the dollar's "real" value against every currency in the world. Major present-day US trading partners such as China, Mexico and South Korea are not in the basket at all; the composition has only changed once, in the early 1990s, when several European currencies were folded into the euro.
How the index moves up and down
The index was set at a base value of 100 when it launched. When DXY rises, the dollar has strengthened against that six-currency basket; when it falls, the dollar has weakened. Over its history the index has covered a wide range: its highest recorded level was near 164.7 in February 1985, and its lowest was near 70.7 in March 2008, at the peak of the global financial crisis.
Today, Thursday, August 13, 2026 (22 Mordad 1405), the Dollar Index stands near 99.99, roughly the same range as its 1973 base value. For comparison, the same index stood near 100.9 to 101 in mid July of this year (around July 9 to 10, 2026); over the past month, the dollar has weakened slightly against this basket.
The inverse relationship with global gold
Gold is always priced in dollars in the global market, as you saw in the "One Gold Ounce in the World: Two Numbers That Build Its Iran Price" lesson. When the dollar strengthens against the DXY basket, the same amount of gold becomes more expensive for buyers who trade in euros, yen or pounds, and demand usually softens a little; when the dollar weakens, gold becomes cheaper for those same buyers and demand usually picks up. That is why DXY and the global gold ounce tend to move in opposite directions in most periods, though this relationship is not a law of physics.
Two real, dated examples of this relationship: in the week ending July 10, 2026, when DXY was near 101, the global gold ounce was still trading below 4,000 dollars in that same window. Today, however, with DXY down to near 99.99 (about one percent below its mid July level), the global gold ounce has reached 4,372.92 dollars: over that same one month window, as the dollar eased slightly against its basket, gold climbed close to 9 percent.
A worked example
Suppose the Dollar Index falls from 104 to 100 over a week, a drop of about 4 percent. If the usual inverse relationship holds and the global gold ounce simultaneously rises from 4,000 to about 4,160 dollars (a gain of about 4 percent), while Tehran's free market dollar rate stays unchanged over the same period, then the price of a gram of 18 karat gold inside Iran would also rise by roughly that same 4 percent. That is because, as you saw in the gold ounce lesson, Iran's gold price is the global ounce multiplied by the dollar rate, not an independent number.
In Iran's market: the transmission channel
DXY has no symbol of its own in Iran's market and never appears directly on an exchange board; its effect on the domestic market travels through two channels. The first and main channel is the global gold ounce: any DXY move that shifts the ounce price feeds straight into the formula that prices Iranian gold and coins, the ounce multiplied by the dollar rate. The second channel is the dollar price of other commodities such as oil, which can affect Iran's foreign currency revenue and the government budget through the same route.
What DXY does not directly move is Tehran's own free market or agreed dollar rate. That rate is set by domestic currency supply and demand, liquidity, expectations and sanctions, the same four channels explained in the "What Moves the Dollar Rate? Four Channels That Build the Exchange Rate" lesson, not by the euro and yen weights inside the DXY basket.
Common mistakes
First mistake: assuming that a rising DXY means "the dollar in Iran gets more expensive too." Tehran's dollar rate and the dollar's rate against the global six currency basket are two entirely separate markets that do not necessarily move together.
Second mistake: treating the DXY to gold relationship as a permanent law. During severe geopolitical shocks, both assets are sometimes bought together as safe havens, and the inverse relationship temporarily breaks down.
Third mistake: equating DXY with the dollar's "true" value against the whole world economy. The index measures only six currencies, and major present day US trading partners such as China have no place in it.
Summary
The Dollar Index (DXY) is a thermometer for the dollar's strength against six major world currencies, not against the whole currency market. When it rises, the dollar is usually stronger and gold usually cheaper for non dollar buyers; when it falls, the opposite usually holds. But this number's channel into Iran's market runs through the global gold ounce and dollar priced commodities, not directly through Tehran's own dollar rate. To see this chain from its start, revisit Sahmino's previous lesson on oil benchmarks (Brent, WTI and the OPEC basket): that lesson showed how another dollar priced commodity has its own separate route into Iran's foreign currency earnings. To browse every lesson in this series, visit the Sahmino Academy page.
