US Dollar Strength Gauge
Valuation and trend, analyzed together
Based on live FRED data (DTWEXBGS)
โ ๏ธ Important
This analysis is based on statistical patterns in historical data. Unpredictable events โ wars, disasters, sudden political shifts โ are not captured, so use it as a reference only.
Broad-Money Growth: Major Economies Compared
Each country's broad money is shown in local-currency terms as a cumulative growth rate (%) over the selected period.
The flatter the line, the more conservatively that country prints money.
Latest months may differ by country due to publication schedules.
Currency Scorecard vs. the U.S. Dollar
Money printing (broad money) ยท rate appeal (policy rate) ยท external soundness (current account), each scored relative to the U.S. โ a reference indicator.
| Country | Broad-Money Growth 3-yr annualized avg |
Policy Rate |
Current Acct (%GDP) |
Money | Rate | External | Total | Verdict vs. USD |
|---|
โป Each factor is scored โ2 to +2 relative to the U.S.; the higher the composite (โ6 to +6), the greater the odds of strength vs. the dollar. This scorecard is reference analysis, not investment advice. Actual exchange rates depend on many more variables โ trade structure, capital flows, geopolitics, sentiment โ and a high score does not guarantee strength. Sources: broad money OECD, policy rates BIS, current accounts IMF.
FAQ
Q. If I want to bet on dollar weakness, where should I diversify?
A. The dollar index (DXY) is, by construction, the inverse of six major currencies. Betting on dollar weakness means holding them: euro (EUR, ~57.6%), Japanese yen (JPY, ~13.6%), British pound (GBP, ~11.9%), Canadian dollar (CAD, ~9.1%), Swedish krona (SEK, ~4.2%) and Swiss franc (CHF, ~3.6%). Diversifying in those weights effectively tracks a DXY decline. Add gold โ which belongs to no country โ and you complete a hedge against the dilution of all fiat currencies, not just one.
Going one step further: among those currencies, favor the one with the slowest broad-money growth โ exchange rates ultimately move on the relative difference in money supply between two countries. The key insight: even if DXY falls, a currency whose money supply grows faster than America's can lose value even faster than the dollar. Dollar weakness does not guarantee strength in whichever currency you pick. Rather than blindly shorting DXY, weight toward the country printing most conservatively โ compare them in the broad-money chart above.
Q. And if I want to bet on dollar strength?
A. The key is pure dollar exposure with as little "other risk" as possible โ no equity or long-duration bond price swings. Cash-like dollar assets fit best.
โ Dollar cash / FX deposits โ the purest form. Simple and immediate, though it typically earns little or no interest, and tax treatment of FX gains varies by country.
โก SOFR / money-market ETFs โ track the U.S. overnight rate. You keep full dollar exposure while collecting short-term interest โ essentially "dollar cash that pays" with virtually no duration risk.
โข Short-term Treasuries (T-bills / short-duration ETFs) โ short maturities mean prices barely fall when rates rise. Like SOFR ETFs, a defensive "dollar + short-term yield" option.
Bottom line: for yield, SOFR ETFs and T-bills beat plain cash โ but always compare after-tax returns under your own country's rules. And ideally, add dollar exposure when this page shows the "undervalued + uptrend" combination.
Q. So should I buy dollars now?
A. This tool estimates the odds that timing is favorable, based on history. Undervalued readings have historically favored long-term FX gains, while buying in overvalued zones risks short-term losses. Always weigh the trend alongside valuation.
Q. Are DXY and the trade-weighted dollar (DTWEXBGS) different?
A. Yes. DXY measures the dollar against six major currencies and is heavily euro-weighted (57%+). DTWEXBGS includes a far broader set of trading partners โ China, Mexico, Korea and more โ giving a more realistic picture of the dollar's overall strength. This page uses both.