As reported recently in the WSJ, we have seen a historically large increase in the value of the U.S. Dollar relative to the Euro. Further, the Journal suggested that the interest rate environment (U.S. increasing, the European Central Bank decreasing) will further exacerbate this FX situation. In simple Supply and Demand terms, Could you help me to explain why the change in interest rates in the two economies will cause a change in the exchange rate of the currencies of the two economies.