While the early week moves were optimistic, they come off the back of a rather dour period for risk trades in general and a strong rally for the dollar. One can argue that the retracement yesterday is akin to the market letting off some steam after the more uniform trend in recent weeks.

For today, the more tentative and cautious risk tones is seeing the market revert to the dollar - and yen - again currently.

EUR/USD is down 0.3% to 1.0515 while GBP/USD is seen down 0.5% to 1.2425 with the pair seeing a rather firm rejection with offers lined up close to 1.2500 in the past few sessions:

Besides that, AUD/USD is also down 0.4% to 0.7000 again as the push and pull continues to center around the figure level on the week.

As much as the dollar rally in recent weeks has been unrelenting, there is still reason to not fight the tide just yet. Even if firm deleveraging pressure may be put on hold for now, the more challenging global economic backdrop and the tighter and more aggressive Fed policy (as reaffirmed by Powell yesterday) are still key factors at play at the moment. Put together, it makes for a poor risk backdrop and one that the dollar can still benefit from.