The Bank for International Settlements maintains a rich time series on real effective exchange rates; The Bundesbank keeps wonderful historical data. Interestingly, Econbrowser uses the data to show that the appreciation of the dollar against the euro is much less pronounced when we look at the broadest exchange rate measure. The answer is of course China holding its exchange rate with the US fixed. 

 Despite the euro's depreciation, the dollar has exhibited much less movement on a real, trade-weighted, basis.

Real Effective Exchange Rates 

Figure 2: Log broad trade weighted real USD (blue bold), CNY (red) and EUR (green). Source: BIS and author's calculations. 

The world is coming to the dollar rescue - or is it self interest?

The Wall Street Journal reports that the World Tries to Buck Up Dollar as  Thailand, Korea, Russia Seen Buying U.S. Currency; Pressure on China to Boost Yuan 

SUMMARY: Governments stepped up efforts to stem the dollar's slide amid increasing concern about the impact of its weakness on their economic recoveries.

QUESTIONS (from the Journal-in-Education program):

1. What determines the value of the dollar on foreign exchange markets?

2. What accounts for the recent slide in the value of the dollar?

3. What are the economic consequences of the depreciating dollar?

4. What can the government do, if anything, to mitigate the fall in the value of the dollar?

5. What are the implications of the depreciation of the dollar on monetary policy? Does the

fall in the value of the dollar affect the Fed's ability to achieve it's goals?