I keep reading about the dollar getting stronger.

I don't really understand this?

Why is the dollar getting stronger?

What causes the dollar to get stronger or weaker?

I was thinking that with all of the money printing, the dollar would get weaker? I guess I misunderstood.

Would anyone explain this in layman's terms, please?

How strong a currency is relative to other currencies out there. If you invest in US Debt, you are investing in the dollar. The Fed has repeatedly raised rates. The bank of England raised rates only 3/4% once so far, where we have raised it about 3%. So people will chance the highest returns so they are flying to the dollar. That means things that are bought and sold in Dollars, are skyrocketing.

The fed has made it clear that they will continue to raise rates to combat inflation. The problem is the fed control rates but they don't control supply line bottle necks, chip shortages, labor force shortages, wars in the Ukraine, stimulus spending or the reduction of fuel drilling.

Ray did a great job lining out many factors that play into the strength of a currency, in particular the fact that we must ask,"strong compared to what?"

The answer is other sovereign currencies. The Euro, the British pound, the Swiss kroner, etc.

Currencies that are strong are in high demand. The US Government has started to unwind the massive QE (quantitative easing) that's been going on forever. Fewer dollars in the market coupled with high demand means the US dollar (USD) is more stable and therefore more desirable than say a country like Venezuela which is in economic turmoil and whose citizens have all but abandoned their national currency is favor of foreign currency such as "dollar blue", a black market scrip money back by the USD.

The advantage of strong currency is you can buy imports from counties with weaker currencies cheaper. The disadvantage is the opposite: your exports to weaker countries cost more, so that means exports sell less US made stuff as weaker currency nations trade more with other weak currency nations.

For the day to day American, it doesn't matter much, except as Ray noted stronger currencies tend to pay higher interest rates on cash savings, which is one reason why they are strong to begin with.

Good job of describing the strength of USD.

Lets say you exchanged $1000 in US currency into European Euro's last October. At the time you spent $1.16 to buy Euro's at the then current exchange rate. So you ended up with 862 euro's.

Russia invades Ukraine and Europe's oil prices go sky high, much worse than here so now it takes more Euro's than Dollars to buy the save volume of Gas. The Euro is now worth less.

Fast forward to today. You exchanged those euro's back into dollars. Today the exchange rate is $.98 so your initial $1000 investment is now worth $845. Why is it worth less than the $1000 you invested? Because you were holding Euro's when they devalued because of the difference between their inflation and ours (among other things).

By the way, that now means that goods that are sitting in warehouses in Europe are cheaper than the same goods sitting in warehouses in the US so they will not be buying as much from us which will cause the US economy to contract more (devaluing the dollar) than what the Fed is trying to do by raising interest rates. Over time this is what stabilized the world economy in a free world supply/demand cycle.