Dollar Weakens by 0.8%, Global Stocks Fall on Rising U.S. vs Greenland Tensions

- The U.S. Dollar fell by 0.8% against the Euro, as Trump still pursues his plan to seize Greenland. - Europe stands firm (even after Trump's 10% tariff threat) together with Greenland, and Denmark says "full solidarity."

Adepu Bindu

21 Jan 2026 — 3 min read

Dollar Weakens by 0.8%, Global Stocks Fall on Rising U.S. vs Greenland Tensions

The U.S. vs. Greenland case may turn into a trade war, as the Dollar fell 0.8% against the Euro. Investors are clearly not liking the rising heat and uncertainty, and are moving money out of risky assets like stocks and the U.S. dollar (at the moment). The US stock market opened with a sharp dip, with the S&P 500 down by 1.3%. At the same time, Europe's main market index, Stoxx Europe 600, closed at 0.7% lower.

The situation is only creating more tension as neither side backs down. Trump is all in to seize Greenland and is threatening Europe with a 10% trade tariff. Europe, on the other hand, is firmly siding with Greenland and Denmark. So, what exactly is going on in the market? How are the numbers looking? Learn more.

📉 Market Reaction to the Greenland Crisis

Market/Asset	Market Performance	What It Means
U.S. Dollar	Fell 0.8% against the euro	Investors lost confidence in the US amid political and trade tensions.
S&P 500 (US stocks)	Dropped 1.3%	Big US companies lost value as fears of instability grew.
Nasdaq (Tech stocks)	Fell 1.5%	Tech stocks were hit harder because they’re more sensitive to global risk.
European Stocks (Stoxx Europe 600)	Closed 0.7% lower	European investors are also worried about a US–EU conflict. European companies could be hit directly by US tariffs, which would: Reduce exports Hurt company profits Slow economic growth in Europe
Overall Market Mood	Negative and cautious	Fear of trade wars and geopolitical conflict made investors pull back

Why Does Greenland Matter Economically?

U.S. willingness to take over Greenland when it rightfully belongs to Denmark is causing several economic tensions:

Europe is all on Greenland and Denmark's side, and it's firm with that decision.
To make the Europeans back out, Trump is threatening 8 countries (Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden, and the United Kingdom) with a 10% tariff.
These tariffs are linked to political pressure, not normal trade disputes.

Even after the threats, these eight countries have issued a joint statement stating "full solidarity" with the people of Greenland, rejecting U.S. pressure.

Not just that, European Commission President Ursula von der Leyen and Council President Antonio Costa have also issued a joint statement saying that "sovereignty is not for sale". And yet Trump is not willing to settle. That's the reason the risk of a US-Europe trade war is likely.

Why Are the Markets Worried About a Trade War?

Trade wars usually lead to higher prices, lower company profits, and slower global growth. Before all this could happen, the fear caused the stocks fall, and the dollar to weaken. Therefore, the investors have become cautious.

U.S. Economic Stance in the Trump vs Greenland & Denmark Case?

The US Treasury Secretary asked other countries not to react quickly or escalate tensions. However, the reactions are out there. He further warned that an aggressive response could make global trade worse. He also mentioned that Europe is still an economic ally of the US (and, interestingly, is putting 10% tariff pressure).

Final Thoughts...

Trump is not going back, and neither is Europe, and neither is Greenland. Amidst these tensions, currencies and stocks are taking the blows, as seen in the numbers. However, only time can decide what can happen. Let's wait and see. For more updates on the same, keep in touch.