Risk-Off Grips Markets on AI Selloff, Middle East War, CPI Anxiety

A powerful risk-off wave is sweeping across global markets as traders contend with a triple threat: renewed fears over inflated AI and technology valuations, a fresh escalation in Middle East hostilities, and mounting anxiety ahead of the pivotal US CPI data release. The convergence of these factors is driving capital flows into traditional safe havens, with the Japanese yen, Swiss franc, and gold all seeing increased demand. Equity markets are under heavy selling pressure, particularly in the tech-heavy Nasdaq, while crude oil prices remain volatile on geopolitical supply disruption fears. The US Dollar Index is experiencing mixed signals — benefiting from safe-haven demand while simultaneously facing headwinds from deteriorating risk sentiment that could weigh on US economic prospects. Currency traders should monitor USD/CHF and USD/JPY for safe-haven flow dynamics, while commodity-linked currencies such as AUD and CAD face downside risks from the broader risk aversion. The upcoming CPI print serves as the next major catalyst that could either calm or further inflame current market tensions.