In the world of currencies, the dollar is starting to look like a safe home in a tough neighborhood.

A strengthening U.S. economy, combined with a gloomy outlook for growth elsewhere in the world, is pushing the U.S. currency sharply higher.

The dollar is up 6.4 percent against a group of major currencies since the start of May and has risen in three of the past four months. The U.S. currency climbed to its highest level in six years against the Japanese yen Tuesday, and it's trading at its highest level in 14 months against the euro.

A continued run-up could mean lower prices for imported cars and crude oil. On the other hand, it could also crimp profits for U.S. companies as their goods become pricier overseas.

A stronger dollar starts with a healthier U.S. economy, and recent news on that front has been mostly good. Construction, manufacturing and autos sales have all been strong.

Those healthy signs have allowed the Federal Reserve to wind down its stimulus for the economy. The Fed's next step would be to raise short-term interest rates from their near-zero levels, a move expected next year.

Improving growth and the prospect of higher interest rates make the U.S. a more attractive place to invest, prompting people to buy dollars and push up the currency's value.

At the same time, the outlook in Europe and Japan is less encouraging.

"While consumption here is not booming, it is in a better place than it is in Europe or Japan," says Russ Koesterich, chief investment strategist at BlackRock.

By: DocMemory
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