USD devaluation is a result of imbalances of supply and demand for the dollar. You can read it as less foreign buyers want the dollar, considering how low the interest rate is to atttract buyers as well as perceived disinterest in US investment. Since there are more high growth areas in developing countries and such, foreign investors looking to gain higher yields are flowing their capital in that direction.The US is traditionally a safe-haven for investment and undoubtedly capital inflows will arise once again, but only when foreign developing markets are saturated and growth has subsided.Then the mighty dollar will rise once again against its peers.
People are freaking out about the declining dollar, but there is almost no chance that a weak dollar will lead to a recession. There is little to no correlation between the value of the dollar and a recession, especially since the weakening dollar is not due to inflation.In fact, the opposite is the case: as the dollar weakens, it becomes cheaper for foreign countries to buy US goods. This stimulates export growth. Additionally, the Fed can take a couple of steps to stave off a recession if needed, starting with cutting of interest rates.Currency exchanges are not a "race," so it is impossible to think of one currency as being ahead of or behind another. It is simply what the currencies are trading at on the open market. As the dollar becomes cheaper, you'll start seeing foreign banks buying up dollars because they know that the value will eventually rise. It then becomes a self-fulfilling prophecy because the increased demand makes the price rise.The only time a weak dollar really hurts is if, like I just did, you take a trip to Europe and get hammered on the exchange rate. In a macroeconomic sense, however, the weak dollar is not threatening at all.