Dollar drops further as the fallout from Trump's Greenland tariffs continues
The chaotic and erratic policy setting nature of the US administration continues to bite at the dollar to start the year. After a bit of a better showing in the early stages in 2026, the dollar is now trading down to fresh two-week lows. So much for a change in avenue, eh?
As Trump steps up the rhetoric on Greenland over the weekend in threatening Europe with tariffs, geopolitical risks now turn to economic and trade risks once more. We've seen this episode already in 2025 and here we are again in 2026.
Before this though, Trump has always ended up making a TACO situation. But after the move on Venezuela and his bitterness to not being awarded to Nobel Peace Prize, the latest assault on Greenland feels like it could be different.
I mean, it might not be in the end but it doesn't seem to matter. At this stage, markets are not waiting around to find out anymore. The dollar selling is almost immediate and it speaks to the confidence and current world view on the greenback.
EUR/USD is now up 0.5% on approach to 1.1700 after making a break above both its key hourly moving averages for the first time this year:
That shifts the near-term bias to being more bullish once again and is one technical reason in amplifying the dollar declines this session.
The de-dollarisation and currency debasement theme continues to run so long as this chaos and unpredictability stays. And that will remain bad news for the dollar in general.
But looking at the major currencies space today, there is another standout and that is the Japanese yen. Even with the dollar in the dumps, the yen is also lying at the bottom of the pile with USD/JPY near unchanged at 158.20 currently. That says a lot about the yen currency sentiment after Japan prime minister Takaichi called for a snap election for 8 February.
Once again, if something can't go up on good news then there's bound to be trouble ahead. Tokyo intervention when?
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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