USD Risk-Off: AI Bubble Fears Drive Safe Haven Flows to JPY/CHF

Risk sentiment has deteriorated sharply as BofA's Fund Manager Survey reveals 45% of respondents cite AI bubble as the biggest tail risk, triggering safe-haven flows into JPY and CHF. USD/JPY dropped 0.5% to 154.20, while USD/CHF fell 0.4% to 0.8850 as investors reduce exposure to risk assets. The survey highlights extreme positioning with 54% calling long Mag 7 the most crowded trade and cash levels at just 3.7% - historically a sell signal. Emerging market currencies face particular pressure, with USD/MXN rising 0.6% and USD/BRL up 0.8%. Technical indicators suggest further USD weakness possible if risk-off sentiment persists without a December Fed rate cut. Key support for USD/JPY sits at 153.80, while resistance emerges at 155.00. Traders should monitor equity futures and VIX levels as additional risk-off catalysts could accelerate safe-haven flows.