The dollar hit a six-month high against the yen this week and a two-year peak against the euro. And many experts expect the move to continue.
The dollar's strength stems from the U.S. economy's superior performance compared to Europe and Japan. U.S. GDP expanded at a 4.2 percent annual rate in the second quarter, while Europe registered zero growth, and Japan's economy contracted at a 7.1 percent rate.
A rising dollar represents a double-edged sword, says Anthony Mirhaydari founder of Mirhaydari Capital Management.
"On balance, this is a good thing for most Americans in the near term," he writes in The Fiscal Times.
"While a stronger currency will weigh on U.S. GDP growth (by reducing exports as they become relatively more expensive overseas), since the U.S. imports about 20 percent more than it exports, a stronger dollar will be supportive of global GDP."
But the long-term consequences may not be so beneficial, Mirhaydari says.
"In fact, it could be a disaster if it happens too fast, undermining the assumption that has supported the global economy since the financial crisis—that dollars would be plentiful and cheap for a long time to come."
Meanwhile, financial author/money manager James Rickards sees trouble in the foreign exchange market across the world.
"I think this is one long currency war," he told RT news service. "We are now getting into more of a battle, more of a confrontation. The U.S. dollar is the only strong currency. That cannot last. The U.S. cannot have a strong currency, because we are desperate for inflation."
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