A:

The two terms, weak dollar and strong dollar, are generalizations used in the foreign exchange market to describe the relative value and strength of the U.S. dollar against other currencies.

A strong dollar occurs when the U.S. dollar has risen to a level against another currency that is near historically high exchange rates for the other currency relative to the dollar. For example, the exchange rate between the U.S. and Canada has hovered between 0.6 CAD/USD and 1.1 CAD/USD, if the current exchange rate is at 0.7 CAD/USD, the American dollar would be considered weak and the Canadian dollar strong. A strong U.S. dollar, on the other hand, is one that is trading at a historically high level, such as 1.1 CAD/USD.

The terms strengthening and weakening have the same context but refer to the changes in the U.S. over the period of time being mentioned. A strengthening dollar is one in which the U.S. dollar has increased in value compared to another currency. This means that the U.S. dollar now buys more of the other currency than it did before. A weakening U.S. dollar is the opposite as it means the U.S. dollar has fallen in value compared to the other currency - making the U.S dollar buy less of the other currency.

The terms strong, weak, strengthening and weakening can be used to refer to any currency.

RELATED FAQS
  1. Why is currency always quoted in pairs?

    When reading currency quotes, you have probably noticed that there is only a single quote for a pair of currencies. Currency ... Read Answer >>
  2. How are international exchange rates set?

    International currency exchange rates display how much one unit of a currency can be exchanged for another currency. Currency ... Read Answer >>
  3. How does the balance of payments impact currency exchange rates?

    Take a brief look at the relationship between a nation's balance of payments and the exchange rate value of its currency ... Read Answer >>
  4. If a country's currency is determined by the strength of its economy, why isn't the ...

    Generally speaking, when Country A's currency is worth more than that of Country B, it does not necessarily mean that Country ... Read Answer >>
  5. How is the forex spot rate calculated?

    The forex spot rate is determined by supply and demand. Banks all over the world are buying and selling different currencies ... Read Answer >>
  6. How can I trade in cross currency pairs if my forex account is denominated in U.S. ...

    The forex market allows individuals to trade on nearly all of the currencies in the world. However, most of the trading is ... Read Answer >>
Related Articles
  1. Forex

    The Pros & Cons Of A Strong Dollar

    As the U.S. economy has emerged from the Great Recession, the strength of the U.S. dollar has also improved.
  2. Forex Fundamentals

    How To Calculate An Exchange Rate

    An exchange rate is how much it costs to exchange one currency for another.
  3. Forex Education

    Forex Tutorial: Reading a Forex Quote and Understanding the Jargon

    One of the biggest sources of confusion for those new to the currency market is the standard for quoting currencies. In this section, we'll go over currency quotations and how they work in ...
  4. Savings

    U.S. Travelers: Book That Trip Abroad Now

    Appreciation of the U.S dollar against the euro and other currencies is making travel abroad cheaper. Here's how to benefit.
  5. Investing Basics

    Explaining Fixed Exchange Rates

    A government using a fixed exchange rate has linked the value of its currency to the value of another country’s currency, or the price of gold.
  6. Professionals

    FOREIGN CURRENCY OPTIONS

    The value of one country’s currency relative to another’s is constantly changing and is known as the exchange rate. Large commercial banks exchange currencies for their own accounts ...
  7. Forex Education

    Top Economic Factors That Depreciate The $US

    A variety of factors contribute to currency depreciation, including monetary policy, inflation, demand for currency, economic growth and export prices.
  8. Forex Education

    Forex Currencies: The EUR/USD

    By Brian PerryThe United States and the European Union are the two largest economic entities in the world. The U.S. dollar is the world's most heavily traded and most widely held currency. The ...
  9. Forex

    Making And Losing Money

    The foreign exchange, or forex, market can be a risky place to trade, get a better understanding in this walkthrough.
  10. Economics

    Countries Most Affected By A Strong U.S. Dollar

    The U.S. dollar is still the most important currency in the world. It's used for trade, foreign reserves, and as a substitute for the gold standard. As the U.S. dollar continues to grow stronger, ...
RELATED TERMS
  1. Weak Dollar

    A situation where the U.S. dollar's value is decreasing relative ...
  2. Dollar Rate

    The exchange rate of a currency against the U.S. dollar (USD). ...
  3. Dollar Bull

    An investor or speculator who is optimistic about the outlook ...
  4. Reciprocal Currency

    In the foreign exchange market, a currency pair that involves ...
  5. International Currency Exchange Rate

    The rate at which two currencies in the market can be exchanged. ...
  6. Dollar Bear

    An investor or speculator who is negative on the outlook for ...

You May Also Like

Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center