The US Dollar Index (DXY) measures the dollar's strength against a basket of six major world currencies, with the euro carrying the largest weight (~58%).
The basket
DXY weights: Euro (57.6%), Japanese yen (13.6%), British pound (11.9%), Canadian dollar (9.1%), Swedish krona (4.2%), Swiss franc (3.6%). It was launched in 1973 with a base value of 100.
What moves the DXY
Federal Reserve interest rate decisions, US economic data (especially employment and inflation), risk sentiment (DXY often rises during global uncertainty as a safe haven), and relative growth between US and other major economies.
What it means for your finances
Strong dollar = your USD purchasing power abroad is higher (good for US travelers, importers). Weak dollar = imports more expensive, but US exports more competitive and commodities (oil, gold) typically rise. If you hold non-USD assets, a strong dollar reduces their USD value when converted.