USD rebounds modestly after Trump eases Greenland threat – MUFG

FXStreetJan 22, 2026 11:30 AM

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The US Dollar (USD) has regained some ground against major currencies after President Trump dropped his threats of tariffs and military action against NATO allies, reducing immediate downside risk, MUFG's FX analyst Lee Hardman reports.

Dollar stabilizes as sharp sell-off risk diminishes

"The US dollar has rebounded modestly against other major currencies after President Trump dropped his threats of military action and/or imposing tariffs on fellow NATO members. Heightened US policy uncertainty under the Trump administration relating to foreign policy, trade policy and interference with Fed’s independence has contributed to a weaker US dollar over the past year."

"The loss of confidence in US policymaking is likely to remain a headwind for the US dollar as we have seen at the start of this year. However the risk of a sharper US dollar sell-off have diminished after President Trump’s quick climb down over Greenland, and early indications from the Supreme Court overnight that they are likely to rule against President Trump’s decision to fire Fed Governor Lisa Cook."

"The Financial Times has reported that the US Supreme Court justices appeared skeptical of Donald Trump’s efforts to sack Governor Cook. Several justices appeared wary of solicitor John Sauer’s arguments that the courts should not have reinstated Governor Cook and that President Trump has the power to fire her without due process. Justice Brett Kavanaugh warned that firing a Fed Governor with no judicial review or process could “weaken if not shatter” the Fed’s independence."

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