Comment by weatherlite

> The value of a country's money is backed by a combination of how much they produce and how much foreign currency and assets from other countries they hold (euros, dollars, gold) they have on reserve.

I think the simplest way to think about it is simply supply and demand. Currently there is constant high demand for USD due to its reserve status as you said (supply is also growing btw , deficits, printing of money etc). If demand goes down, there will be too much supply so the Dollar will naturally weaken against other currencies. As far as I know the fact that one USD equals 0.95 Euros (or whatever) is simple market forces of supply and demand.