There is no dollar policy other than markets and there are a number of good reasons for the dollar to weaken. But, Feldstein says, Europe has some ability to limit the damage:
Instead of simply wishing that the dollar would stop falling, European governments need to take steps to stimulate domestic demand to replace the loss of sales and jobs that will otherwise accompany the more competitive dollar. … [R]egulatory changes and revenue-neutral shifts in the tax structure (for example, a temporary investment tax credit financed by a temporary increase in the corporate tax rate) could provide the stimulus needed to offset declining net exports. It is therefore important that EU governments turn their attention to this challenge.
