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The dollar may have gotten its dusty safe-haven suit out of the closet due to intensifying recession fears.

Indeed, coming on the heels of the discouraging ISM manufacturing PMI on Monday and the slump in job openings on Tuesday, it was the ISM non-manufacturing survey's turn to disappoint.

The PMI fell by more than expected, getting closer to the boom-or-bust zone of 50, with the new orders, employment, and prices subindices all missing their forecasts.

Considering that the services sector accounts for nearly 80% of U.S. GDP, yesterday’s data may have added to concerns about the health of the U.S. economy, urging market participants to lower even more their implied Fed rate path.

Above: GBP/USD has come off its highs as the USD finds a safe haven bid.

Although they remained evenly split on whether another quarter-point hike is needed at the upcoming meeting or not, they took the level at which they expect interest rates to end this year down to around 4.0%.

Meanwhile, signs that the labour market is cooling were enhanced by the ADP employment report, which, just two days ahead of the NFP data, showed that the private sector gained fewer jobs than anticipated in March, and much fewer than it did in February.

Although ADP is far from a reliable predictor of the NFP print, it comes on top of the dismal job opening data for February, and the weak employment picture painted by the ISM surveys.

The initial jobless claims for last week, due out today, could constitute another important piece in the labour-market puzzle.

Despite the US dollar gaining ground, Treasury yields drifted lower, confirming that the dollar’s inflows may have been the result of a flight to safety market reaction.

The fact that gold stayed supported yesterday and slid only slightly today adds extra credence to this notion.

Having said all that though, with Treasury yields keep sliding on expectations of a Fed pivot as soon as this summer, it is hard to envision the U.S. dollar gaining for much longer.

As long as it continues to lose its yielding appeal, investors may preserve their preference for other safe havens, like gold and the yen.

S&P 500 and Nasdaq extend losses as economic concerns increase on Wall Street, the Dow Jones eked out some gains, but both the Nasdaq and the S&P 500 extended their slide, reinforcing evidence that investors are more concerned about the state of the US economy rather than being happy about the prospect of lower interest rates.

Nonetheless, with the technical picture remaining relatively resilient, it may be too early to start assuming that the market is completely switching the narrative from ‘bad news is good news’ to ‘bad news is actually bad’.

The Nasdaq is now testing the key zone of 12900 as a support, while the S&P 500, despite pulling further back, remains near the key resistance zone of 4150.

The move in the S&P 500 that could darken the outlook may be a decisive dip below the 3800 zone, which has been offering strong support since December.

Charalampos Pissouros, Senior Investment Analyst at XM.com. An original version of this article can be viewed here.