Only a month ago the dollar slumped to an all-time low against the euro. And it's just five weeks since the greenback hit a 12-year low against the yen.

But now, the US currency has started to strengthen - with the markets talking about a "turning point". On Wednesday, the dollar reached a six-week high against the European single currency, closing in on $1.53 - an improvement of more than 5 cents. And on the same day, the greenback climbed to a 10-week peak against the pound.

But does the dollar remain in danger? Could "the rope slip" and the world's pivotal currency still go into freefall? That would plunge America beyond recession and into depression - as inflation ballooned amid soaring import costs, forcing the Federal Reserve to raise rates in the teeth of shuddering slowdown.

A plummeting US currency would also cause chaos globally, as central banks sought to protect the value of their reserves. And after the inevitable overshoot, the currency would snap back, sending financial markets into a tailspin, and threatening a fully-blown global slump.

That danger has been averted for now, but could soon come back with a vengeance. And while policymakers in Washington will be content with the current situation, those elsewhere shouldn't be.

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