Dollar gains on Greenland deal and risk rally – ING

FXStreetJan 22, 2026 11:06 AM

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The US Dollar (USD) has strengthened alongside risk assets after Trump scrapped EU tariffs following a Greenland framework deal, though markets await more details before fully shifting focus, ING's FX analyst Francesco Pesole notes.

Fed meeting looms amid hawkish tilt for USD

"The dollar has followed the relief rally in risk assets after a framework deal on Greenland prompted Trump to scrap new tariffs on the EU. Trump is handing over negotiations to other top officials, including JD Vance and Marco Rubio."

"So far, very little is known about the agreement. Markets may require learning more about that and perhaps a few days of additional conciliatory remarks to finally turn their focus away from Greenland. But the approaching Fed meeting (28 January) means some refocus on macro drivers is on the cards. The combination of stabilising unemployment and the DoJ probe on Powell may be tilting the balance more on the hawkish side."

"We discussed last week how Powell's fierce response to the criminal investigation signalled upside risks to the dollar, as he and other members could have turned more hawkish in a meeting without any rate change to reinforce the independence message. Some downside risks for the dollar persist: more volatility in JGBs spilling into Treasuries, scrutiny on upcoming US tech earnings, reignition in geopolitical/tariff risk. But the macro picture should favour a bit more dollar strength in the coming days, in our view."

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