Dollar retreats as trade tensions fuel risk aversion

19 January 2026

Today’s markets analysis on behalf of Konstantinos Chrysikos Head of Customer Relationship Management at Kudotrade

The US dollar weakened at the open on Monday, pulling back from multi-week highs and underperforming against other major currencies. The move followed renewed geopolitical and trade tensions after President Donald Trump threatened several European countries with new tariffs in an effort to gain control over Greenland.

Germany, the United Kingdom, France, Denmark, Norway, Sweden, the Netherlands and Finland were identified as potential targets, facing a proposed 10% tariff from February 1, which could rise to 25% in June unless an agreement is reached. Expectations of retaliation have also weighed on global risk sentiment and raised concerns about broader economic stability.

Looking ahead, markets might remain primarily focused on trade-related headlines ahead of new developments and data releases. Attention will shift later in the week to Thursday’s releases of GDP and core PCE inflation data, which could prove pivotal for near-term direction in both the dollar and yields.

 

Zaid Barem / ymm