AI Reversal Could Weaken Dollar Safe-Haven Appeal

Record foreign inflows into U.S. technology stocks, corporate bonds and AI-related power infrastructure have helped support expectations of stronger growth and a firm dollar, but analysts warn that a reversal could expose the currency to selling if investors pull back from U.S. assets. Recent episodes of concern about AI valuations have seen investors favor the yen and Swiss franc over the dollar, raising questions about its traditional safe-h haven role during market stress. At the same time, strong results from chipmaker SK Hynix have eased some fears of an AI-driven equity correction, helping markets refocus on resilient growth, inflation and energy prices that could support the dollar in the near term. The outlook therefore hinges in part on whether AI-related investment and earnings continue to justify current valuations, as well as on the path of interest rates and central-bank policy.