It is surprising that markets have not shown further reaction to the the Cyprus problem of convertibility. This is an issue that will touch all markets around the world. If there is an increased probability that governments will not allow convertibility, there will be less desire to hold any currency outside of your home or if you believe there will be a convertibility problem with your home currency, there will be a desire to hold another store of value such as the dollar.
If the single currency Euro has a convertibility problem what about other currencies from countries that are "less developed". The Cyprus restriction means that all euros are not the same. Your Italy euros may not be the same as a French or German Euros. The EU governments with the ECB now states that it has the power to make changes in the system with little regard for the Euroholders. Of course, there has to be restrictions on the Cyprus banks or there will be a flood of money out of the country, but is there a better way to handle the problem.
The dollar rally is a result of the convertibility issue. There is a belief that the dollar will not be restricted. Nevertheless, I want to hold deposits in Banco de Mattress.
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