Draw the graph · Macro · Foreign exchange market
Europeans buy US stocks
Drag a curve sideways, or use its arrows. A curve you do not move is a curve you are saying stays put. Make each shift clear enough that a reader could see it.
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Demand for the currency shifts right. Supply of the currency stays put.
American stocks are priced in dollars, so European buyers must exchange euros for dollars first. At every exchange rate they want more dollars, and the demand for dollars shifts right. The supply of dollars is unchanged. The dollar appreciates.
The dollar appreciates against the euro and more dollars are traded.
Common mistake. A common error is to shift the supply of dollars, reasoning that 'the stock sellers receive dollars.' The sellers are already paid in dollars. What changed is Europeans needing to buy dollars, which is demand.
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Lesson: Trade & Exchange Rates