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U.S. dollar index falls

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Yen and Swiss franc jump as investors seek safety

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Tech selloff pushes U.S. stocks lower

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Central bank policy meetings and economic data in focus

(Updates prices throughout, adds analyst comment)

By Chibuike Oguh and Stefano Rebaudo

NEW YORK, Jan 27 (Reuters) - The Japanese yen and the

Swiss franc gained while the U.S. dollar fell 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.

China's DeepSeek rolled out a free AI assistant that it says

uses lower-cost chips and less data, seemingly challenging a

widespread AI bet that in the past has lifted shares of U.S.

technology stocks, especially chipmaker Nvidia ( NVDA ).

The dollar came under pressure whereas the yield on the

benchmark 10-year Treasury note dropped 6 basis

points to a one-month low of 4.561% as investors rushed into

safe-haven assets and government bonds.

The benchmark S&P 500 lost 1.46% to close at

6,012.28, dragged down by technology stocks. Nvidia ( NVDA )

plunged 17% to $118.42, hitting a nearly four-month low.

"A lot of people seem to be taking a pretty large leap here

that DeepSeek is unsettling the major tech names that's going to

lead to a rout in equities, and a rout in equities is going to

cause the Fed to be supportive," said Eugene Epstein, head of

structuring for North America at Moneycorp in New Jersey.

"I think it's a number of steps too far but given the fact

that all these different asset classes are moving in the same

classical safe haven direction, it seems that's the current

rationale. Whether that rationale makes sense or not is, I think

it's highly debatable. But that's at least how the market seems

to be reacting at the moment."

The Japanese yen rose 0.87% to 154.63 against the

dollar after tightening up to 153.71, its strongest level since

mid-December. The Swiss franc rose 0.50% against the

greenback to $0.90155.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

fell 0.29% to 107.36, after dropping to its lowest level since

mid-December. The euro was up 0.02% at $1.0491.

The dollar recorded its biggest weekly loss in more than a

year last week on expectations that tariffs enacted by U.S.

President Donald Trump will be lower than previously feared. But

concerns have resurfaced as the U.S. and Colombia pulled back

from the brink of a trade war.

"U.S. equity markets are selling off hard and foreigners

were large record buyers of U.S. stocks in December. That is a

contrarian indicator," said Marc Chandler, chief market

strategist at Bannockburn Global Forex in New York.

"Many people were concerned already that U.S. stocks were

overvalued. DeepSeek exposes these concerns," he said. "And what

it did was the U.S. 10-year yield is down. That is why the yen

and the Swiss franc have done relatively well."

The Mexican peso, a barometer of tariff worries,

weakened 2% to 20.693 per dollar. The Canadian dollar

was down 0.22% versus the greenback at 1.44 per dollar. Trump

said last week he may impose duties on products from Canada and

Mexico from Feb. 1.

"The Mexican peso is the weakest of the emerging market

currencies today. I think it suffered in sympathy with Colombia

and the threat of tariffs," Chandler said.

"While the Canadian dollar is down, it is doing a little bit

better than the other dollar block currencies like the Aussie

and kiwi."

The Australian dollar weakened 0.41% versus the

greenback to $0.6283. The kiwi weakened 0.35% versus the

greenback to $0.5689.

Major central banks, including the Federal Reserve and the

European Central Bank, will meet this week after the Bank of

Japan raised its rates and Governor Kazuo Ueda said last week

the BoJ would keep tightening its policy as wage and price

increases broaden.

The personal consumption expenditures (PCE) price index -

the Fed's favourite inflation gauge - is due on Friday, while

inflation data will be released from Germany, France and Japan

on Friday as well.

"I think the market's going to turn cautious now ahead of

Wednesday when both the Federal Reserve and the Bank of Canada

meet," Chandler added.

Bitcoin fell 4.38% to $100,497.28, but still traded

near the record high of $109,071.86 touched last week. Ethereum

declined 6.51% to $3,112.97.