When you say demand for a currency is increasing, does that mean people are borrowing more of it or buying more of it in order to invest in that currency?
Here’s an example: tomorrow if there’s a global financial crisis, people look for safe havens. From a currency perspective & retrospectively, it’s been the USD. So during this time, the USD would be seen appreciating or depreciating very less relative to other currency. This means demand is high for USD and people are switching to the USD due to lesser currency volatility or lesser negative returns (if any).