The source data taken as individual points are fine, but I guess I question some of the assumptions...in particular this: "One year ago today, the US$/Euro was 1.2777. Today it is 1.3452 - a 5.3% devaluation. About 20% of that devaluation is directly due to the deficit caused by illegals."
How is 20% of the devaluation of the dollar vs the Euro due to illegals? For one thing, there are many more illegals in Europe than the U.S. (just look in the back of any restaurant in Stuttgart, Dublin, or Madrid). I'm no economist, though I do read a fair bit on the subject, and this is the first time I've ever heard of a direct link between the forex rate and illegal immigration.
The primary cause of the devaluation of a fiat currency, such as the US$, is its excess money supply caused by deficit spending. If not for the illegals, our current deficit would have dropped by roughly 20% the last few years. This is their contribution to the devaluation of the US$.
The interest rates are a contributing factor, but insignificant when compared to money supply/debt with regard to their impact on exchange rates (personal savings, future debt projection, and economic growth projections all have more of an impact than interest rates, but money supply dwarves all of them combined). If spending is reigned in, and deficits eliminated, there is no need to attract investment by hiking rates as there are no debt securities that need to be issued. Interest rate were never intended to be used to control exchange rates.
Further evidence of how little the interest are impacting the foreign exchange rates is how our excess interest rates are already more than the market is willing to bear. This is shown by the yield inversion. For most of the past couple years the yield on 2 year notes has exceeded the 10 notes. Nobody wants the US$ long term regardless of the rates. This created Greenspan's "conundrum" where the debt created such a problem that his only tool, control of the interest rates, was becoming worthless our own economy (thus the yield inversion, birth - boom - and bust of the sub prime, and further off topic areas).
A glaring example of how little the fed fund rate has have on the Forex, when the Fed started the interest rate hikes on June 30, 2004, they hiked the rate to 1.25%. The ECB rate at the time was at 2.00%. Now, the Fed is sitting on 5.25, and the ECB is at 3.75. The Fed rate has gone fro 0.75% lower than the ECB to 1.50% higher - a gain of 2.25% - a three-fold gain. If anything, using the interest rate theory, the US$ would have strengthened enormously vs the Euro. The opposite it true. On June 29, 2004, the Euro/US$ exchange rate was 1.2179. At this moment, it is at 1.3460.
As for the war on terror, since it's declaration, our debt has grown by approximately $3.01 trillion to date. The cost of the wars on terror, in Afghanistan and Iraq in strictly financial terms, with the recent funding, is being reported at about $510 billion, or about 17% of annual deficits - roughly the same as the amount of the deficit created by the reckless lack of enforcement of existing immigration laws.
Finally, economic theory is beginning to change, to turn more to the theories of Freidman rather than Galbraith - at least in the rest of the world. The fiscal policies of the US has us in unchartered waters. As Greenspan noted, much of the former economic theory and Fed policies no longer apply. As a government, we need to be fiscally responsible, end the deficits, turn them into surpluses, and reduce our debt. This is going to be difficult enough with the Medicare, Social Security, and Education time bombs sitting out there (and whose fuses have burned much more rapidly during these extreme deficit years). The open door immigration/amnesty policies are an unnecessary drain. To the existing citizens and legal immigrants, as well as future legal immigrants, the enforcement of existing immigration laws and rejection of the amnesty bill are relatively painless cuts in the deficit.