US dollar strength on growing risk aversion.

Will mild risk aversion turn into a storm? Greece got a downgrade of BBB + with it's debt to GDP at 112% of GDP.

The reasons behind current US dollar strength

Greece can't print money or devalue it's currency (it is part of the EU with a EURO currency) like Argentina did in 2001 and since 77% of foreigners own Greek Debt (bonds) the country is essentially fucked. The IMF and EU can intervene but they have to borrow from other large deficit (EU) countries to fund a bailout (which was written into the EU agreement that the Union wouldn't bail out individual countries). It simply cannot be funded unless the EU devalues the EURO (then you have inflation).

But a 'natural' huge devaluation of the EURO can only occur if the USD is bought on mass and the EURO collapses. But the USD is an unstable currency with the US looking very shaky in 2010

Or Greece can sell everything to foreign investors to balance their account deficits, literally sell off the country to outside interests. This is probably the only solution they have, but comes at a price; social turmoil, as overseas interests that buy public assets then restructure those assets to be profitable. Usually means job losses and cost cutting.

The rest of the EU is next.