The U.S. dollar is by far the most actively traded currency in the world, accounting for 86 percent of currency transactions according to the Bank for International Settlements’ Triennial Central Bank Survey (December 2007). When traders talk about "trading the dollar," they’re usually referring to the Euro/dollar (EUR/USD) pair, which is seen as the purest dollar play in the forex market. In the futures market, the dollar index (DX) contract offers traders a dollar play that reflects a basket of currencies, with the Euro being the most heavily weighted.

But depending on the situation, are the EUR/USD pair or the dollar index contract necessarily the best options? After all, there are a half-dozen major currencies tied to the dollar. To find out if some are more advantageous than others, let’s look at big moves by the (cash) U.S. Dollar Index (DXY) and see how the moves by the individual major currency pairs compare.