AI Market Shift Could Weaken Dollar’s Haven Role.

An AI-related market correction may erode the dollar’s haven role, while recent joint weakness in U.S. technology shares and the currency reflects risks that now run in both directions.

Foreign investors hold more than $20 trillion in U.S. equities. About 90% of the increase in the value of those holdings came from rising share prices rather than additional purchases.

Over the past 10 years, U.S. stocks and the dollar were negatively correlated. That pattern gave overseas investors an incentive to leave currency exposure unhedged.

If domestic pressures push U.S. stocks lower, the dollar could fall alongside them, compounding losses for overseas investors. That conditional risk differs from recent simultaneous weakness, which reflects more two-sided dollar risks.

A concurrent decline in U.S. real yields and stocks would suggest markets are lowering expectations for growth in AI-related capital spending. Such a move could also strengthen the case that the dollar’s haven role is weakening.