FX Daily: Greenland pressure risks dollar blowback in Daily Currencies Ratings 19/01/2026 USD: A little early for the ‘Sell America’ story The weekend saw Washington up the ante in its pursuit of Greenland. As our colleagues discuss here, the threat of 10% rising to 25% tariffs on eight European nations looks part of Washington’s ‘maximum pressure’ playbook to secure a deal. Many political commentators are writing that this will prompt the end of the EU’s appeasement policy towards the US. France seems to be at the forefront of recommending the use of the EU’s Anti-Coercion Instrument – a trade tool targeting taxes, tariffs and investment limits on countries trying to coerce the EU. This topic and the threat of a NATO split look set to dominate the policy agenda in a week which otherwise would have seen heavy focus on Ukraine. US President Donald Trump is due to speak at Davos on Wednesday, while EU leaders are set to meet a day later. The question will be whether European leaders will follow China’s playbook from last year – matching US tariffs one-for-one – to ultimately prompt a Washington climb-down. The initial market reaction to the weekend events has seen gold gap 2% higher, German Dax futures marked 1.5% lower, and the dollar slightly weaker. US markets are closed for the Martin Luther King public holiday, but S&P futures appear to be off around 0.8%. It is probably a little too early to be dusting off the ‘Sell America’ theme, where Washington’s pursuit of Greenland, like the near 50% Liberation Day tariffs last April, is seen as a spectacular own-goal. Certainly, investors seem very wary of chasing themes like these, which typically look like noisy rhetoric before diplomacy plays out. Nonetheless, these developments will add some volatility in an otherwise benign/calm investment environment. On the subject of ‘Sell-America’, we wrote on Friday that there was very little evidence of ‘de-dollarisation’ last year. Even if events were to severely escalate, it looks unlikely we would see the kind of 10% dollar sell-off witnessed last year, when the buy-side was exceptionally FX underhedged in its US exposure. Away from Greenland, this week could possibly see President Trump announce his pick to replace Jerome Powell as Federal Reserve Chair. The dollar rallied on Friday when it emerged that the President wanted Kevin Hassett to stay at the National Economic Council, and Kevin Warsh is now seen as the frontrunner – a mild dollar positive if confirmed. Expect US data to take a back seat to politics this week, and expect the dollar to try exploring the downside. Gap resistance at 99.35 might now limit the topside for DXY, and a correction back to the 98.80/85 area is the mild bias. Chris Turner EUR: Unwelcome developments The flare-up over Greenland and the threat of renewed tariffs are very unwelcome for European industry. This comes at a time when industrial sentiment has finally started to rise, with businesses seemingly having learnt to live with last year’s tariff volatility. These developments will focus European minds on the need to generate domestic demand and potentially even push through sluggish reforms such as the Savings and Investment Union, to allow Europe’s capital markets to better compete with those of the US. EUR/USD has found support under 1.1600. Key intraday resistance is seen at 1.1650, above which 1.1690/1700 is possible. One-week and one-month EUR/USD traded volatility have been marked as a little higher, whic