The U.S. dollar gained in early European trade Tuesday, as traders turned to this safe haven after disappointing Chinese services activity hit risk-taking sentiment.

At 03:00 ET (07:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.3% higher at 104.382, close to three-month highs.

Weak Chinese data boosts safe-haven dollar

Data released earlier Tuesday showed that China’s services activity expanded at the slowest pace in eight months in August, with stimulus from Beijing having so far failed to meaningfully revive the second largest economy in the world.

The Caixin services purchasing managers’ index rose 51.8 in August, lower than expectations for a reading of 53.6 and July’s figure of 54.1.

This disappointment has seen traders run to the safety of the U.S. dollar, with the dollar index climbing close to its highest level since early-June.

At the same time, USD/CNY rose 0.3% to 7.2940, with the yuan falling to a one-week low.

The U.S. market is set to return from Monday’s public holiday, and the focus is likely to be on the number of Fed officials who are set to speak this week, offering more cues on monetary policy before a hotly-anticipated meeting later in September.

While the U.S. central bank is expected to keep interest rates steady, it is also expected to reiterate its plans to keep rates higher for longer.

Euro weakens ahead of Lagarde speech

EUR/USD fell 0.3% to 1.0764 ahead of the release of the final eurozone activity data for August, which is expected to paint a negative picture of the strength of the region’s economy.

The eurozone composite PMI is expected to come in at 47.0 in August, a fall further into contraction territory from 48.6 the prior month.

A run of soft eurozone data, particularly out of Germany, Europe’s biggest economy, has raised the likelihood of the European Central Bank pausing its rate-hiking cycle later this month.

ECB President Christine Lagarde is set to speak later Tuesday, her second consecutive day in the spotlight. She declined on Monday to remove the impression that the central bank officials were looking to pause the series of rate hikes at the meeting later this month.

Is the dollar really that weak?

Some people think the dollar will soon collapse. They say so because it is only valuable through government fiat. However, the dollar’s weakness is shared by every other major national currency the world over. Anyway, a common constant danger or worry is that government could print too much money for political reasons or to support wars.

IMF has been installed as a watchdog. It was created to monitor the Federal Reserve and its commitment to Bretton Woods. Today, it uses other reserves as a discipline on Fed activity. In case, governments and investors want to shift away from the dollar en masse, short positions could mostly hurt anyone with assets denominated in the currency.

One precaution is that Fed must not create money too much.

Will the dollar collapse?

That’s a multi-million question. Yes, there could be some scenarios where that happens. One is the dual threat of high inflation and high debt. However, if the U.S. government struggles to afford its interest payments, foreign creditor may dump the dollar. That single move could collapse the it.