“DOWN AND DOWN I go, . . . loving the spin I’m in” might have been written by Harold Arlen and Johnny Mercer as an anthem for the dollar. As it spins down, cries of both glee and anguish are heard in the land, and economists scramble to offer explanations.

Some of these experts are confessing confusion, as all–well, almost all–signs point to dollar strength. The latest jobs report shows that the economy is steaming ahead. The Fed has again raised interest rates. Investors are pouring cash into shares, consumer confidence and spending are up, oil prices are down, and retailers are rubbing their hands in anticipation as the Christmas season approaches. Meanwhile, business confidence in euroland is declining, reports show that the E.U.-U.S. productivity gap is widening as the European Union refuses to implement the reforms promised four years ago in Lisbon, and domestic demand in Europe remains flat at best. In short, everything seems to be in place for a dollar rally. Yet we see a $1.30 euro and hear talk of a $2 pound.