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What is volatility index (VIX)?

The VIX, often called the “fear index,” measures expected volatility in the US stock market based on S&P 500 options pricing. A rising VIX indicates greater market uncertainty, while a low VIX reflects stability. Traders use the VIX to gauge sentiment, hedge portfolios, or speculate on volatility. It is not a direct forex tool but impacts global risk appetite, influencing safe-haven currencies like USD and JPY. The VIX is widely monitored as a leading indicator of market stress.