Why is the Dollar Index strong after the Fed dropped the Fed Fund Rate? I have a query about the current forex market. In 16 March 2020, the US Federal Reserve Bank announces to cut the interest rate to 0%. This move supposedly weaken the Dollar Index, but why for a sudden movement it becomes stronger?
It is always very hard to precisely identify the causes of a particular index variation. Here, note that the U.S. Dollar Index (DXY) is a measure of the value of the US dollar relative to a basket of foreign currencies. So, the DXY Index goes up when the U.S. dollar gains value when compared to other currencies. Given that the economic slowdown is global, the US dollar could strengthen relative to other currencies