Global markets took a sharp pause on Tuesday as investors finally trimmed positions in the biggest artificial intelligence winners. Major US and European indices slipped, led by tech and chip names, while volatility picked up across FX, bonds and crypto.

Why it matters for FX traders
The risk-off tone pushed investors back into the US dollar and classic havens like the Swiss franc, while high-beta currencies such as the Australian and New Zealand dollars lost ground. The Japanese yen, which had been pinned near multi‑month lows, managed a modest recovery as traders cut leveraged carry trades and braced for fresh signals from the Bank of Japan and the Federal Reserve.

Key market moves to watch
Equity indices linked to AI and semiconductors underperformed broader benchmarks, reinforcing the idea that positioning had become crowded after months of one-way gains. In FX, USD/JPY eased back from recent peaks but remains elevated, EUR/USD is struggling to hold gains, and safe-haven pairs like USD/CHF and EUR/CHF are attracting renewed interest. Bitcoin and other digital assets also cooled as traders reduced overall risk exposure.

What comes next
Attention now turns to upcoming US data, central-bank speeches and any hints of coordinated messaging from Japanese officials on excessive FX volatility. If the AI-led equity pullback stays orderly, FX moves may remain contained. A deeper correction, however, could trigger a broader dash for liquidity, favouring the dollar and safe havens while pressuring cyclical and emerging-market currencies.