The currency index represents the evolution of a currency relative to the entire forex. The index is the average of one currency compared to others. the chart representation makes it easy to view trends by currency.

The currency index is the change in a currency with reference to other currencies. It is calculated by taking the average of these variations in this particular currency by reference to others and then it is charted so as to be better evaluated. As a result it is easier to discern the different trades of the currencies. Hence the currency index is a helpful method to carry out analysis.