Euro set for weekly drop, yen eyes biggest gain since early September

The euro is set for a moderate weekly decline, while the Japanese yen is poised for its biggest weekly gain since early September. This shift comes after a tech-led market sell-off that showed the dollar no longer benefitted from safe-haven flows, as concerns about the AI investment boom led to expectations of a more dovish Federal Reserve.

The Japanese currency rose on Thursday due to safe-haven demand amid fragile equity markets and fears of potential unrest in France, which has seen its sovereign risk premium climb. The dollar also rose 0.15% to 157.00 yen, climbing 2.15% to 156.88 in the week ending September 21, the day the Fed raised interest rates. The single currency was near ending the week with a modest drop, although French government bonds' sharp sell-off brought France's risk premium to levels last seen during the 2011 euro zone sovereign crisis.

Strategists noted both the euro and dollar faced selling pressure, leaving the pair marginally in favor of the dollar. The Euro was last down 0.15% at $1.1200 and set to decline 0.42% for the week.