Money market accounts are now paying .95% versus 4-5% historically. Assuming that Euro based interest rates on the equivalent deposits are higher then it just makes sense that people would trade dollars for Euros and put the Euros in a bank or equivalent money market account at the higher rate. That would put selling pressure on the dollar and it would fall. That is what has been happening.
Tell me it's more complicated than this.
Good comments. United States' deficit is only 1.5% of its GDP while most (if not all) European countries percentage is higher. If we pursue the weak dollar policy, I think it will wreck havoc with the more liberal EU countries because they will have extreme difficulties generating enough tax revenues from the private industries to finance expensive social programs. These EU also have to meet financial criterias from Euro bankers which may be impossible. Let me know if I am wrong. :)
More or less, yes. Europe is sliding into recession (again) and needs to cut rates. Enough rate cuts by the Euros would help bring the currecies closer to parity.