U.S. Dollar (USD)

By Laurent · Aug 2026

The official currency of the United States and the world's primary reserve currency. The USD is involved in approximately 88% of all forex transactions and serves as the benchmark against which all other currencies are measured.

The Dollar's Role in Forex

The U.S. dollar (ISO 4217 code: USD), often symbolized as $, is by far the most traded currency in the world. According to the Bank for International Settlements (BIS) Triennial Survey, the dollar is on one side of 88% of all forex trades. It serves as the base or quote currency in all major pairs and is the standard pricing currency for commodities including oil, gold, and agricultural products.

Why the Dollar Dominates

The dollar's reserve currency status stems from the size and depth of U.S. financial markets, the stability of U.S. institutions, the Petrodollars system, and the legacy of the Bretton Woods System agreement. Central banks worldwide hold approximately 58% of their foreign exchange reserves in dollars, far more than any other currency.

The Federal Reserve's monetary policy decisions are the single most important driver of global forex markets. Changes in U.S. interest rates affect Interest Rate Differential across all currency pairs, and dollar strength or weakness sets the tone for global risk sentiment.

Key fact: The dollar is nicknamed "the greenback" (from the green ink used on U.S. banknotes since the Civil War) and "the buck." The U.S. Dollar Index (DXY) measures the dollar against a Currency Basket of six major currencies.

Key Dollar Drivers

The dollar responds to Non-Farm Payrolls (NFP), Consumer Price Index (CPI), Federal Reserve rate decisions, and risk sentiment. It typically strengthens during Flight to Safety episodes as the ultimate Safe-Haven Currency currency.