Geopolitical Shift: Trump U-Turn on Tariffs and Greenland Sparks Risk Rally

WikiFX

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Abstract：Risk sentiment surges as President Trump withdraws tariff threats against Europe and announces a NATO-brokered framework for Greenland, removing a key tail risk for global markets.

Global markets breathed a collective sigh of relief on Thursday after US President Donald Trump executed a stunning reversal on two major geopolitical fronts. The abrupt de-escalation has dampened demand for the US Dollar and safe-haven assets while boosting risk appetite across European and Asian sessions.

The 'Diplomatic Compromise'

In a move that surprised EU leaders, Trump announced he would cancel punitive tariffs originally scheduled for February 1. The decision follows a meeting with NATO Secretary General Mark Rutte.

Greenland Resolution: Trump walked back threats regarding Greenland, announcing a framework involving NATO. The deal focuses on joint security (“Gold Dome” missile defense) and shared mineral extraction rights.
Market Impact: The removal of tariff risks triggered action in the USD, while EUR/USD stabilized. The pivot secures US interests in the Arctic without economic warfare.

European Skepticism Remains

Despite the market's positive reaction, diplomatic sources in Brussels remain wary. However, the removal of the “February 1 Tariff Cliff” eliminates volatility for the Euro and Sterling.

Focus Shifts to Macro Data

With geopolitical noise dialed down, the FX market's focus is returning to fundamentals. Traders are pricing in upcoming US GDP and PCE inflation data, which will determine if the Federal Reserve can adhere to its easing path in 2026.

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