Is The US Dollar Index (USDX) Helpful For Forex

The US Dollar Index is a value of the US Dollar against of  major foreign currencies. It is weighted as the geometric system that mean it's value compared with other 6 major currencies. They are

*EURO................................................... 16.50% weight
*JPY...................................................... 07.28% weight
*GBP..................................................... 03.42% weight
*CAD...................................................... 12.92% weight
*CHF (Swiss Franc).................................. 01.68% weight
*SEK (Swedish Krona)............................... 0.79% weight
*data 10th October 2012

In the March 1973, Bretton Woods System after that it starts with as 100.000 and it's high record 164.7200 in February 1985 and low record in March 2008 as 70.698.

So if you find US Dollar Index as 85.246 that means it fell (100.000-85.246) = 14.754 then you can guess that against pair may be opportunity for buy and hold on.

Formula:
 50.14348112*EURO/USD^ (-576) *USD/JPY^ (0.136) *GBP/USD^ (-119) *USD/CAD^ (0.091) *USD/SEK^ (0.042) *USD/CEF^ (0.036)

Find out index: http://www.federalreserve.gov/releases/H10/Weights

Stephen Jen an economist and former currency strategist describe a theory namely as "The US Dollar Smile Theory"
He has taken up 3 scenarios for this theory as
1. USD strengthens due to risk aversion.
2. USD strengthens due to economic growth.
3. USD weakens due to low economic growth.

Therefore you may find some interesting reaction the USDX for Forex trading. Huh.... Ready to observe it?