The dollar is strong right now because people are speculating that the inflation figures mean that interest rates will be higher sooner and that QE will be rolled back more quickly.
The more an asset earns, the more it is worth.
The more an asset earns, the more it is worth.
I would say that's a potential factor. Then again, I don't believe that there is much sentiment that rates are about to rise but I'm sure others would disagree.
The "carry trade" involves borrowing money in a low interest currency (say EUR) and selling that to buy a higher yielding currency (USD) and pocketing the difference in interest rates.