Henry J Scott#33

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What is safe-haven flow in forex and how does it behave in crises?

Safe-haven flow refers to capital moving into currencies perceived as stable during turmoil—primarily USD, JPY, and CHF. For example, during COVID-19’s 2020 shock, USD surged as investors sought liquidity. Institutions anticipate safe-haven demand through models of risk sentiment, while retail traders can recognize signals like equity crashes or volatility spikes. Benefits: trading alignment with global psychology. Risks: safe-haven dynamics can reverse quickly once confidence returns. Safe-haven flows remind traders that forex is driven not only by economics but also by collective fear and trust.