USD Rises as Trump Drops Tariff Threat, Reaches Greenland Framework With NATO

The U.S. dollar gained on January 21, 2026, after President Donald Trump withdrew tariff threats against several European nations and announced a framework agreement with NATO on Greenland’s future, easing geopolitical tensions. The dollar index (DXY) rose 0.12% to 98.76 in New York, rebounding from its steepest single-day drop since mid-December. Euro and Swiss franc both weakened, with EUR/USD falling 0.36% to 1.17 and CHF/USD up 0.77% to 0.7958. Trump had previously threatened escalating tariffs on EU members, the UK, and Norway over Greenland access, prompting market volatility and broad U.S. asset selloffs. His remarks at Davos ruled out military action and confirmed tariffs would not proceed, sparking relief-driven risk-on sentiment that lifted the S&P 500 by over 1.5%. Analysts noted the de-escalation mattered more than policy details. “The short-term crisis appears over,” said Matt Weller of StoneX. However, EU leaders are still set to meet urgently on January 22 to discuss responses. Meanwhile, USD/JPY rose to 158.43, nearing intervention-watch levels. ING’s Chris Turner warned further JGB sell-offs could push the pair toward 159–160 if authorities tolerate yen weakness as policy-induced.