A safe-haven currency is one that investors buy during periods of market stress, when they want to reduce risk. The three most established havens are the US dollar, the Japanese yen, and the Swiss franc, each for slightly different reasons.
When fear rises — a financial shock, a geopolitical crisis, a sharp equity sell-off — capital tends to rotate out of riskier assets and currencies and into these havens, pushing them higher regardless of their own domestic data.
Why these three
The US dollar benefits from the depth and liquidity of US markets and its role as the global reserve currency; in a crisis, the world reaches for dollars. The Japanese yen strengthens partly because of the unwinding of yen-funded carry trades and Japan's large net foreign asset position. The Swiss franc draws on Switzerland's stability, sound finances, and credible central bank.
Because havens move on fear rather than fundamentals, pairs that combine two havens — like USD/CHF or USD/JPY — can behave unexpectedly during risk-off episodes, as both sides attract demand.