Risk-on / risk-off
Risk-on describes a market buying risky assets (stocks, high-yielding currencies); risk-off describes a market fleeing to safe havens.
In a risk-on phase, investors are confident: stock indices rise, growth-linked currencies such as the AUD or NZD strengthen, and crypto is in demand.
In a risk-off phase, fear dominates: stocks fall, and money flows into safe havens such as the yen, the Swiss franc, government bonds and often gold and the dollar. The VIX volatility index rises.
Understanding the prevailing mood helps you avoid contradictory positions. Being long AUD/JPY and short the S&P 500, for example, means betting both ways on the same sentiment. Check headlines and the VIX before opening positions on risk-sensitive assets.