US Dollar Weakens vs Euro as Trump Softens Greenland Trade Stance

The focus of investors and forex traders remains on comments made by U.S. President Donald Trump during his speech at the World Economic Forum in Davos. In particular, the American leader stated that he and NATO Secretary General Mark Rutte had reached a “framework agreement” on Greenland. Trump did not disclose specific terms, but experts believe it may involve the transfer of part of the island to indefinite U.S. control, including the right to build military facilities and develop mineral resources. The White House also confirmed that the previously announced 10.0% increase in trade tariffs on imports from several European countries will not be implemented.

GDP data were also released today: in the third quarter of 2025, the U.S. economy expanded by 4.4%, exceeding the forecast of 4.3%, mainly due to a 4.7% increase in corporate investment, while consumer sales slowed sharply from 7.5% to 4.5%. In addition, labor market data showed that initial jobless claims rose to 200,000 from 199,000 in the previous week, compared with expectations of 209,000. The four-week average declined from 205,250 to 201,500, while the total number of continuing claims fell from 1.875 million to 1.849 million. Overall, the labor sector demonstrated resilience alongside solid economic growth, increasing the likelihood that the Federal Reserve will keep interest rates unchanged for an extended period.

Eurozone

The euro is strengthening against its major counterparts — the yen, the pound, and the U.S. dollar.

Investors are encouraged by easing tensions between the U.S. and the EU, as well as the cancellation of the additional 10.0% trade tariffs announced by President Donald Trump, which were set to take effect on February 1. Also in focus are forecasts for Germany’s economic outlook published by the Bundesbank. The regulator’s experts stated that recent pessimistic business sentiment suggests GDP growth in the first quarter will be moderate. However, fiscal easing should provide a stronger stimulus in the second half of the year.

Overall, the economic recovery may take longer than expected, despite rising domestic consumption and the stabilization of the industrial sector. As for inflation, the Bundesbank maintained an optimistic outlook, expecting price growth to remain close to the European Central Bank’s (ECB) target of 2.0% in the coming months.

United Kingdom

The pound is weakening against the euro, strengthening against the yen, and showing mixed dynamics against the U.S. dollar.

January retail sales data from the Confederation of British Industry (CBI) were released today: the index rose from –44.0 to –17.0 points, beating expectations of –35.0, while the economic expectations index improved from –57.0 to –30.0 points. Experts believe that the improvement in household sentiment is temporary and that the decline in retail sales will accelerate again next month.

Meanwhile, ahead of a planned meeting next week between UK Prime Minister Keir Starmer and Chinese President Xi Jinping, China’s Ministry of Foreign Affairs stated that strengthening Sino-British economic and trade cooperation benefits both countries and contributes to greater global stability and confidence. Analysts interpreted these remarks as a signal that both sides are seeking to expand into new markets amid rising U.S. trade tariffs.

Japan

The yen is losing value against its major counterparts — the U.S. dollar, the euro, and the pound.

Investor attention is focused on December foreign trade data, which showed export growth of 5.1% versus expectations of 6.1%, while imports surged 5.3%, exceeding forecasts of 3.6% and November’s 1.3%. As a result, the trade surplus narrowed to 105.7 billion yen, well below preliminary estimates of 357.0 billion yen.

Japanese exports have now increased for the fourth consecutive month, while shipments to the U.S. declined by 11.1% in December. Meanwhile, exports to Asia and specifically to China rose by 10.2% and 5.6%, respectively. The government’s economic report published today maintained cautious optimism regarding economic recovery, but warned of downside risks linked to unstable U.S. trade policy.

Australia

The Australian dollar is strengthening against its major counterparts — the U.S. dollar, the pound, the yen, and the euro.

Investors are focused on December labor market data, which showed the unemployment rate falling from 4.3% to 4.1%, beating expectations of 4.4%. Total employment increased by 65,200 after declining by 28,700 in the previous month, while full-time employment rose by 54,800 following a drop of 65,300 in November. The labor force participation rate edged up from 66.6% to 66.7%.

Analysts believe that continued labor market resilience, rising consumer spending, and persistent price pressures may prompt the Reserve Bank of Australia (RBA) not only to keep interest rates unchanged for a prolonged period but possibly to tighten monetary policy again.

Oil

Oil prices continue to correct lower. Pressure on the market stems from easing tensions between the U.S. and the EU, the cancellation of planned tariff hikes on European imports set for February 1, and rising U.S. crude inventories.

According to the American Petroleum Institute (API), crude stockpiles increased by 3.040 million barrels. Additional pressure came from comments by U.S. President Donald Trump regarding the proximity of a peace agreement between Russia and Ukraine, which could potentially lead to the lifting of sanctions on Russian oil companies and an increase in global supply. Moreover, U.S. Energy Secretary Chris criticized the EU’s push toward a “green” economy and called for doubling global oil production.