Euro gets much-needed reprieve as AI wobbles rock the dollar

Business Recorder reported the dollar was on course for its first weekly decline in five weeks, letting the euro recover from a 17-month low. Renewed unease over AI investment and a drop in US yields halted the currency's recent gains. AI-linked stocks have slumped this week, spreading stress into the credit market, where investors fear data centre operators may not become profitable in time to repay debt.

Investors have moved into US Treasuries, where the 10-year yield is heading for a weekly decline larger than any in over a year. The shift has also pulled money from the dollar, which had been helped by the AI boom. In early Asian trading the dollar was 0.2% lower on the week at 158.13 yen and down about 0.1% at $1.1210 per euro.

The euro had fallen more than 3% over the previous five weeks on worries about France's debt and a winter energy squeeze. Brent Donnelly of Spectra Markets said a serious reassessment of AI spending would be unambiguously bearish for the dollar. Traders now await Federal Reserve Chair Kevin Warsh's remarks in Bangkok on Friday, with a 72% chance of the Fed holding rates this month priced in.