@article{TORUL2027102413,
title = {Reflex without persistence: The dollar’s multi-day safe haven reversal in 2025},
journal = {Journal of International Financial Markets, Institutions and Money},
volume = {114},
pages = {102413},
year = {2027},
issn = {1042-4431},
doi = {https://doi.org/10.1016/j.intfin.2026.102413},
url = {https://www.sciencedirect.com/science/article/pii/S1042443126001290},
author = {Orhan Torul},
keywords = {Safe haven currencies, U.S. dollar, Flight to safety, Reserve currencies, Foreign exchange options, High-frequency data},
abstract = {A safe haven currency appreciates when risk rises. Using sixteen years of high-frequency cross-asset futures data, I study the U.S. dollar on 465 risk-off days, defined as days on which S&P 500 futures fell by more than 1%. I separate the dollar’s safe haven behavior into an intraday reflex, the five-minute comovement that lifts the dollar as equities fall within the trading session, and its persistence over the following week, measured by the cumulative dollar return. The two diverged in 2025. The reflex survived, but the dollar’s five-day haven beta against the euro was positive in 2024–2026 (βh=5=+0.75), with the reversal concentrated in 2025: deeper equity declines were followed by more dollar depreciation, while German Bunds and the rival reserve currencies rallied. Resampling whole stress episodes confirms the break from earlier years but cannot exclude zero for the 2024–2026 level, which rests on few episodes. The reversal appears mainly after unscheduled shocks, and the EUR/USD option-implied skew repriced dollar tail risk over the same window. A simple model of contestable reserve status organizes these facts. The effect fades in early 2026: it is a stress episode, not a proven regime change.}
}