To determine how the dollars-per-euro exchange rate will change if the exchange rate is expected to rise, we need to understand the relationship between demand and supply in the foreign exchange market.
If the euro is expected to appreciate (rise in value), this means that people will want to hold euros more, increasing the demand for euros. As demand for euros increases, there will be a corresponding decrease in the supply of euros being sold at the current exchange rate because holders of euros will be less willing to sell their euros at lower prices.
Thus, the correct explanation from the options given is:
The expectation of an appreciating euro increases the demand for euros and decreases the supply of euros on the foreign exchange market. The result is a higher exchange rate in the near future.
This option indicates that the increased demand and decreased supply lead to a higher (or rising) exchange rate for euros in terms of dollars.