A technical-market analysis combining the traditional USDx (DXY) Spot with the DOW JONES-FXCM USDOLLAR may likewise provide a better understanding between price distribution as to the direction of price parameters. The difference is that, by applying the DJ-FXCM-USDOLLAR would provide a measure of the U.S. dollar’s value equally weighted (25% for each currency pair) as against four of the world’s most liquidly traded currencies; namely the Euro, Cable, Yen and the Aussie Dollar.
On the other hand, the Dow Jones FXCM Yen Index reflects changes in Value of Japanese Yen Measured Against Basket of Liquid Currencies: U.S. Dollar, Euro, Australian Dollar, New Zealand Dollar.
While the SPOT USDX, since its inception in 1973, weighs heavy in the European currencies, with EURO @58.6% weighting, and a total 78.3% weighting in European currencies including the Swiss Franc. Therefore, weighing which index would provide more weight as an added value to the trades made in the Forex market depends on one's perception of the market. Remember, that every strategist and trader / investor would be comfortable with and effective with their own trading style to say the least.
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