If we have a deficit in the U.S. current account then, everything else equal: The demand for dollars will possibly be lower than the supply of dollars in the exchange rate market. The supply of dollars will possibly be lower than the demand for dollars In the FX market O This would put pressure on the U.5. dollar to appreciate against other currencies @ The demand for dollars would possibly be larger than the supply in the foreign exchange market, this would put pressure on the U.S. dollar to appreciate against other currencies