“The dollar is in free-fall!”, “The global greenback is doomed!”, screamed recent headlines. Actually, such sensational headlines are “too sensational” to echo that noted authority on currencies, Miss Prism, in Oscar Wilde’s “The Importance of Being Earnest”.

The dollar’s fall in July to a two-year low against the euro was the immediate impetus for these stories. In fact, the dollar’s recent slide is one in a series of readily explicable fluctuations. When the Covid-19 pandemic went global in March, the dollar strengthened on the back of safe-haven flows into US Treasuries, as it does at the star...