The Japanese yen and the Swiss franc gained against major currencies on Monday amid a selloff in technology stocks as markets weighed the implications of a Chinese startup launching a free open-source artificial intelligence model.

The Japanese Yen continues to draw support from the BoJ's hawkish interest rate hike on Friday. The divergent BoJ-Fed outlook and narrowing US-Japan yield differential favor the JPY bulls. Fed rate cut bets could act as a headwind for the buck and further cap gains for the USD/JPY pair.

The Yen and Swiss Franc were stronger against the dollar as investors sought safe havens after Chinese start-up DeepSeek’s new AI model hit U.S. tech stocks.

The Japanese yen is slightly lower on Thursday. In the European session, USD/JPY is trading at 156.25, down 0.16% on the day.

A weaker yen is typically good for Japanese exporters but could push inflation higher because the country imports much of its energy and food. The Bank of Japankicked off a global market selloff last time it raised interest rates. The likely rate increase this week will be less dramatic, but the real suspense lies in what comes next for the yen.

Shares were mixed in thin Asian trading on Monday after U.S. stocks edged back from their all-time high. Oil prices fell and U.S. futures sank, while Chinese shares shed some of

The gap could widen even further, and exacerbate pressure on the yen, if the Federal Reserve’s preferred ... and a lot of very public pushback from Japanese officials,” said Joe Capurso ...

The U.S. dollar weakened against the yen on Thursday, as softer-than-expected U.S. economic data and growing confidence for a Bank of Japan interest-rate hike sent it tumbling to a near one-month low against the Japanese currency.

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Japan's central bank has raised its key interest rate to about 0.5% from 0.25%, noting that inflation is holding at a desirable target level.

Looking back, yen-funded carry trades have turned out to be among the most profitable plays this year. Of 20 major emerging markets currencies, all generated positive total returns, led by the Turkish lira’s 19% and Mexican peso’s 14%.

The dollar firmed on Monday as traders pondered the ramifications of US President Donald Trump's tariff plans at the start of a week where the Federal Reserve is widely expected to hold interest rates steady.