The dollar in the foreign exchange market is correcting some of the gains of the past three months. The dollar index has retreated below 103 after touching 105 a week ago. The retreat of the US currency goes against a wide range of peers and several asset classes. 10year Treasury yields, which peaked near 3.2 last week, are still declining.

Such dynamics reflect investors hesitation regarding the prospects for the US economy, around which recession risks are mounting. The decline in longterm bond yields indicates investors doubts that the Fed will be able to raise and keep rates high for a long time, and it reduces the attractiveness of investing in the dollar.

But it is also worth noting the work of other central banks, which are closing the gap between their policy and Fed sentiment by tightening their rhetoric almost daily.

However, the dollars weakness is contained within the framework of a correction after a tumultuous rally. Talking about a break of the shortterm uptrend is only appropriate if the Dollar Index falls below 102.30, where the lows of May and the 61.8 area of the last rising momentum from the start of April are concentrated.

A break of the latest uptrend is evidence that a false breakup of the longterm resistance at 103.0, earlier this month, was achieved.

However, it has to be noted that the observed weakening of the dollar might be no more than a temporary respite for several reasons.

The pullback in yields of the Treasuries could be a…