A currency strength index measures how one currency performs against a whole basket of other currencies at the same time. An exchange rate such as EUR/USD compares two currencies. The index compares one currency with all of them.
Why exchange rates are incomplete
EUR/USD tells you how the euro is doing against the dollar. It tells you nothing about the euro against the pound, the franc, the yen or the krona.
A currency can rise against one peer while it falls against another, so a single exchange rate can't answer the question most people are really asking: is this currency strong or weak?
Example: in the third quarter of 2022 the euro fell below parity with the US dollar for the first time in 20 years, and the headlines talked about the euro collapsing. The strength index told a different story. Against most other currencies the euro was holding steady. The dollar was unusually strong; the euro wasn't unusually weak.
How the Currency Strength Index works
The FX Compass index is built in six steps.
1. Collect exchange rates
Every trading day we collect official reference rates from the European Central Bank (ECB) for the euro and 13 other currencies, UAH rates from the National Bank of Poland (NBP) and RUB rates from the Bank of Russia (CBR). That gives us 16 currencies:
EUR, USD, GBP, CHF, JPY, CAD, AUD, NZD, SEK, NOK, DKK, PLN, CZK, HUF, UAH, RUB
2. Calculate cross rates
From these base rates we work out every cross rate. With 16 currencies that makes 120 pairs (16 choose 2).
3. Compute daily changes
For each pair we take the daily percentage change. If EUR/GBP moves from 0.8500 to 0.8550, the euro has gained 0.59% against the pound.
4. Average across the basket
For each currency we average its moves against the other 15 currencies, using a geometric mean. The result is a single daily number for how the currency did against the whole basket.
5. Build a cumulative index
The index starts at 100 and compounds the daily changes. If the euro gains 0.3% against the basket on day one, its index goes from 100 to 100.3. Another 0.2% on day two takes it to about 100.5, and so on.
6. Rebase for the selected period
When you choose a time range on the chart, every currency is reset to 100 at the start of that range, so you can compare performance from any starting point.
How to read the chart
- A rising line means the currency is getting stronger against the basket.
- A falling line means it is getting weaker.
- A value of 105 means the currency has gained about 5% against the average of the other currencies since the start of the selected period.
- The distance between two lines shows how differently they performed. The wider the gap, the bigger the divergence.
Open the FX Compass dashboard, pick a few currencies and change the time range. You'll see patterns that no single exchange rate shows.
What the index is not
The index shows trends and relative performance. It is not a trading signal and it doesn't predict where a currency goes next.
It isn't trade-weighted either. Some central bank indices weight currencies by trade volume; ours gives every currency the same weight, so a move against the Japanese yen counts as much as a move against the Danish krone.
And it isn't real-time. It is built from official daily fixings (ECB, NBP and CBR), so it updates once per trading day.
Data sources
| Source | Currencies | Update frequency |
|---|---|---|
| European Central Bank (ECB) | 13 currencies vs EUR | Daily (around 16:00 CET) |
| National Bank of Poland (NBP) | UAH/PLN | Daily |
| Bank of Russia (CBR) | RUB | Daily |
All three are central banks, and their reference rates are used widely by banks, governments and financial institutions.
Real (inflation-adjusted) mode
The Real toggle corrects each currency for inflation in its own country, so the chart shows purchasing power rather than exchange rates alone. Before the basket average is taken, each day's exchange-rate change is adjusted by that day's share of the country's monthly consumer price inflation. Because every currency gets the same treatment, what counts is inflation relative to the basket: a currency whose prices rise faster than average loses ground in real terms, and one with below-average inflation gains.
| Source | Currencies | Update frequency |
|---|---|---|
| Eurostat (HICP) | EUR, CHF, SEK, NOK, DKK, PLN, CZK, HUF | Monthly |
| OECD | USD, GBP, JPY, CAD, AUD, NZD | Monthly (quarterly for AUD and NZD) |
| National Bank of Ukraine (NBU) | UAH | Monthly |
| Rosstat | RUB | Monthly |
Consumer prices come out one to two months late (quarterly for Australia and New Zealand). Until a figure is published, the chart extends the trend of the last three months and draws that stretch as a dashed line.
Who finds it useful
Travelers
Check whether your home currency is broadly strong or weak before you book a trip. When it's strong, your money goes further everywhere, not just in one destination.
Remote workers and freelancers
If you earn in one currency and spend in another, the index shows whether your real income is rising or falling, even when the amount on your contract stays the same.
Investors
Broad currency trends matter for international investing. When your home currency weakens, returns on foreign investments go up in your own currency, and the reverse happens when it strengthens.
Anyone curious
Sometimes the interesting part is a pattern you didn't expect: why one currency jumped in a particular quarter, or why another kept sliding for years. The index shows stories that exchange rates hide.
Frequently asked questions
How often is the data updated?
Every trading day. The ECB publishes its rates around 16:00 CET and the index updates shortly after.
Can I see historical data?
Yes. FX Compass has daily data back to January 2011. Use the time range selector to look at any period.
Why 16 currencies?
These are the currencies with reliable official daily reference rates from the ECB, NBP and Bank of Russia. They cover the major economies and a mix of developed and emerging markets.
Is this the same as the Dollar Index (DXY)?
No. The DXY measures the US dollar against a fixed, trade-weighted basket of six currencies. The FX Compass index measures each currency against all the others with equal weights, which gives a fairer picture for currencies other than the dollar.