#CommunityAMA Arbitrage has long been a stabilizing force in Forex markets, correcting price discrepancies across platforms or currency pairs. However, the rise of AI-powered arbitrage is introducing new forms of distortion rather than equilibrium. Advanced AI systems now scan hundreds of venues and instruments in real time, executing microsecond trades to capitalize on fleeting inefficiencies. But this speed and scale can unintentionally warp pricing structures, especially in illiquid or low-latency environments. These AI models don't just exploit mispricings—they also create them. By front-running slower systems or reacting to predicted order flows, they can momentarily push prices out of alignment, confusing other market participants and triggering unintended trades. In high-frequency arbitrage loops, AI systems may bounce orders between correlated assets, producing synthetic volatility as they churn through positions for marginal gains. Furthermore, when multiple AI models converge on similar arbitrage strategies, their collective activity can overwhelm natural market rhythms. A minor dislocation picked up by one system may be echoed by dozens more, amplifying noise and creating artificial movements across connected currency pairs. This effect is especially pronounced during periods of low liquidity or fragmented market structure. The resulting distortions challenge price discovery and can mislead fundamental traders, who rely on clean signals to assess macroeconomic realities. Regulators and exchanges may need to enforce timing delays or smarter throttling mechanisms to reduce the compounding effects of high-speed AI arbitrage. Left unchecked, these systems risk converting a once-corrective tool into a source of systemic instability, where the pursuit of microscopic profit undermines the broader integrity of the global FX market.