Do currency pairs (EURUSD) effect the corresponding countries currency index (EXY) or do currency indexes effect currency pairs?

Trading Discussion Currencies
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Do currency pairs (EURUSD) effect the corresponding countries currency index (EXY) or do currency indexes effect currency pairs?

Let’s say for the sake of argument that currency pairs move as a result of people trading goods and services between countries, and indices move as a result of people investing in that particular country’s currency. Doesn’t that mean that a currency pair can cause a country’s corresponding currency index to move, and a country’s currency index can also cause a corresponding currency pair to move? So in this case, couldn’t we say that it is vitally important when trading say EURUSD to watch both the EXY and DXY?

I want to understand the relationship between currency pairs and the corresponding country’s currency index. Can anyone provide any wisdom, knowledge, experience, and insight on this?

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I can’t answer fully. I honestly had no idea that there were additional currency indices, I have only ever heard of DXY. But I do recall heaing that 40% of DXY is EUR, so I suspect the answer from someone who knows is likely to be Yes.

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Thanks for the reply! From my research, I was only able to find certain currency indexes on TradingView. Namely DXY(USD), BXY(GBP), JXY(YEN), AXY(AUD), and EXY(EUR). There may be more but I have not been able to locate them yet. I am certain that all currency indexes can be found online, just maybe not in TradingView.

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Currency indices are a formula of that currency against a basket of other currencies with different weightings typically determined by the volumes traded between them.

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