US recap: Dollar mixed as risk aversion slams tech

The dollar index fell with Treasury yields on Monday as concerns about China challenging US AI dominance weighed on technology stocks.

The yen and Swiss franc held earlier gains as havens to the tech market sell-off.

Chinese startup DeepSeek, the company threatening US rivals with a low-cost AI model, said it will temporarily limit registrations due to a cyberattack.

Risk aversion and a strong 5-year auction sent US Treasury yields lower though US new homes sales exceeded expectations and the Dallas Fed manufacturing index improved in January.

Focus midweek is on tech earnings, Q4 GDP, and the outcome of Wednesday’s Fed policy meeting. The US central bank is seen holding it policy rate steady at 4.25%-4.5%.

EUR/USD pared gains after rising above its 20-day upper Bollinger to a 1-1/2-month high of 1.0535. The European Central Bank is expected to lower its policy rate by 25 basis points on Thursday, potentially hampering bullish momentum. A rise above 1.06 is considered bullish with nearby support seen at 1.0450.

GBP/USD was little changed during the session. A dearth of UK data this week will likely see the pair move according to month-end flows and US risks. British Prime Minister Keir Starmer and US President Donald Trump agreed to meet soon after a cordial call on Sunday.

USD/JPY steadied above its daily cloud top at 153.88 as downward momentum stalled and a spike in yen volatility abated. The pair needs to eclipse its 55-DMA at 154.97 to neutralize bears. Japan will eye services PPI on Tuesday.

Treasury yields fell 7 to 10 basis points. The 2s-10s curve was down about 1 basis point to +33.7bp.

The S&P 500 slid 1.8% fueled by falling tech shares.

Oil fell about 2.3% pressured by demand worries amid sliding equity prices.

Gold fell 1.2% while copper slid 2.5% as weak China manufacturing data sparked demand worries ahead of the Lunar New Year holiday.

Heading toward the close: EUR/USD -0.08%, USD/JPY -1.04%, GBP/USD +0.05%, AUD/USD -0.49%, DXY -0.04%, EUR/JPY -1.07%, GBP/JPY -1.00%, AUD/JPY -1.48%.

(Editing by Burton Frierson; Reporting by Robert Fullem)