The dollar fell against most Group-of-10 currencies and is on track for its first weekly decline in more than a month, after a selloff in AI-related shares drove investors toward safe-haven assets and pushed U.S. Treasury yields back from recent highs.
The Bloomberg Dollar Index slipped 0.1%, bringing its weekly loss to 0.2%. Although the benchmark 10-year Treasury yield rose 6 basis points on Friday to 5.12%, it still posted a sharp weekly decline, as the selloff in chip stocks deepened investor concerns about valuations of AI-linked equities.
"The dollar's pullback also coincides with a cooling of optimism around AI-related trades," wrote Derek Halpenny and Lee Hardman of MUFG in a note. "Dollar positioning is clearly overweight, so once market sentiment toward AI deteriorates, the dollar is vulnerable to a reversal."
EUR/USD was little changed at 1.1214, poised for its first weekly gain after five consecutive weeks of losses. The euro found temporary relief on Friday, even though options pricing still suggests the currency will face pressure in the coming months.
GBP/USD rose 0.3% to 1.3314. Bank of England Governor Andrew Bailey said there is currently little evidence that inflation is becoming entrenched in the UK's price- and wage-setting mechanisms.
AUD/USD gained 0.4% to 0.6945, rebounding from a more than three-month low touched on Thursday.
USD/JPY rose 0.2% to 158.29.
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