????By Colin Barr

????No matter what dollar doomsayers might say, the greenback's not done yet.

????The U.S. currency rose last week to its highest level in six months, as the economic picture here showed modest improvement while the outlook overseas grew still more muddled.

????A robust recovery in the U.S. is far from guaranteed, obviously. Yet currency watchers say the dollar is likely to keep gaining in coming weeks, as European nations deal with urgent fiscal problems and officials in China struggle to keep the fastest-growing big economy from overheating.

????"Right now, the market is focused on the negatives in Europe," said Ashraf Laidi, currency strategist at CMC Markets in London. "That's pretty much the opposite of what the situation was last year."

????In 2009, the Federal Reserve's trade-weighted dollar index dropped 6%, as the dollar gave back gains it made during the financial crisis of late 2008.

????The 2009 selloff came alongside a rapid recovery in the price of commodities such as oil and a bounceback in the value of the euro, which had plummeted during the acute stage of the crisis.

????Last year's turnabout got a rise out of dollar bashers such as Peter Schiff, the Connecticut investment adviser who has been warning that the government's profligacy will doom the dollar. He says investors should buy gold instead.

????The U.S. government's plan to run a $1.6 trillion budget deficit in its coming fiscal year is raising alarms with the gold crowd and in Washington. But for now, deficit problems in Europe -- particularly in Greece, whose borrowing costs have spiked this year -- are getting more attention in the currency markets.

????Traders have been watching the Fed and the European Central Bank for a clue as to which might remove some of its support for the markets first. The betting is that problems such as Greece's will keep the ECB's exit strategy on hold for some time.

????"Right now, there are plenty of good reasons to sell the euro and buy dollars," Laidi said.

????The reasons to buy dollars include stronger-than-expected economic growth numbers in the U.S., slowing job losses and pressure for the Federal Reserve to hike interest rates from their current level of about zero. All else equal, a rise in interest rates would boost the value of the dollar.

????Another factor that has been supporting the dollar lately has been concern about the strength of the economic bounceback in China. Chinese banks unleashed a flood of lending in the first half of 2009, initially fueling an economic surge but lately leading to questions about what policymakers might do to fend off inflation.

????The questions about China's economy are important because the country's growth last year is considered a major factor behind the rise in the prices of industrial commodities, not to mention gold. Should Chinese demand weaken as credit grows scarcer, money could move into safe haven currencies such as the dollar and the Japanese yen.

????"China has been the guy buying all the stuff," said Laidi. "If that guy gets ill, you're naturally going to wonder who's going to buy the stuff in his place."

????None of this is to say the dollar is on a permanent upswing. Americans still can't find enough jobs and the U.S. remains vulnerable to a double-dip recession. At some point, concern in the currency markets will shift stateside.

????But for now, the dollar is alive and kicking.