Risk-off” in forex refers to a market environment where investors shift away from riskier assets, like stocks, commodities, or high-yield currencies, and move towards safer, more stable assets. This typically happens during periods of uncertainty or fear, such as geopolitical tensions, economic instability, or financial crises.
In a “risk-off” environment, traders tend to favor currencies that are considered safe havens, like the US dollar (USD), Japanese yen (JPY), and Swiss franc (CHF). These currencies are seen as more stable during volatile times. On the flip side, riskier currencies such as the Australian dollar (AUD), New Zealand dollar (NZD), or emerging market currencies might decline as traders reduce exposure to assets tied to economic growth or commodity prices.
For example, if global equity markets drop sharply due to fears of an economic slowdown, investors may sell off higher-risk currencies and buy into safe-haven currencies, driving the value of the latter higher. This movement is referred to as “risk-off” sentiment.
Wait for 15 seconds to access the link.
