Part of the situation is simple oversaturation of dollars. For example, Asian banks want to get out of the dollar partially because of overexposure to diversify their risk exposure.
While the EU economies are weaker right now, their debt levels are nowhere near US levels.
The trade deficits don't help for obvious reasons.
The problem with the contrarian perspective right now is there have been no shifts in the fundamentals to warrant it. The Federal deficit isn't meaningfully decreasing. The trade deficit isn't measurably improving (exports did increase last year, but imports increased at a faster rate). And, there hasn't been a cataclysmic event to shake out the problems.
The exact same argument goes against the dollar shorts: there's been nothing -- nothing -- that's changed over the past year either pulling down the dollar or, especially, driving up the euro. The trade and budge deficit's are unchanged or trending lower. Above all, the fundamentals read U.S.
What's happening is that the Forex is all a pu**y right now, just scared, and reaching for any little thing, cuz it's got nothing good to grab.
Btw, there are too many dollars out there, but it has to be that way since the U.S. is the only live wire there is. That's why the dollar won't strengthen much. But neither will the other currencies gain. When the dollar reserves tighten, and they will, you'll see it first in gold and oil. The amazing thing is that neither of those has broken further. They can't, for nothing but the dollar can sustain them... which gets us back to my original point...