Greenland Turning the Dollar Red: Slides Nearly 10% as Markets Panic Over US Policy Chaos

The dollar has fallen 9.97% over the past year and is dropping sharply. There are several reasons concerning the markets. Attempts to remove Fed official Lisa Cook, a political fight involving Greenland, and threats of criminal charges against Fed Chair Jerome Powell are among the major issues. However, here's a thing. Markets have ignored the reasons that should normally hurt the dollar. Whereas the markets have turned weak for the U.S., angering its allies, the line should have been drawn. So, what are the things that investors are more relaxed about? And what are the real risks against the dollar? For all that, learn more.

Markets ignored the actual reasons, like:

• Political attacks on the Fed
• Threats against Jerome Powell
• Attempts to remove Lisa Cook

These things are serious and should normally hurt the Dollar. However, investors aren't affected.

How Does This Dollar Fall Compare to the April 2025 Dollar Fall?

The above comparison points to one thing: whenever there is a geopolitical issue, markets rush into panic. And U.S. policies certainly don't handle the situation well in either scenario. So what happened in 2025 is repeating itself (again) in 2026. The investors are reacting to pressure, causing chaos in the market.

Markets Think Us Policy Looks Chaotic

Back in 2025, when the U.S. rolled out new tariffs amid the escalating trade fight with China, the dollar fell. Not just that, it also pushed down something called interest rate differentials. So here's what markets basically believed:

• The tariffs would hurt the US economy.
• The chaos that happened would backfire on the US.
• The US would need lower interest rates than other countries to deal with the damage.

A similar situation is happening right now. The dollar fell drastically again last week, thinking that the Greenland dispute would backfire on the U.S. The gap between expected US interest rates and those of other major countries has also narrowed. Therefore, markets are expecting lower U.S. interest rates than those in the G10 group. 

Markets Got Too Comfortable About the Dollar

Back in the second half of 2025, the dollar eventually stopped falling and became fairly stable (despite how many warned it might crash). However, nothing dramatic happened, and investors stopped believing in a big Dollar drop. According to the weekly Commitment of Traders (CoT) report (of CFTC, a U.S. regulator), by January 20, traders were neutral on the dollar. Therefore, there was no better way for the dollar to go up or down. However, there is a high likelihood that the drop will occur and may last longer and be much larger. 

Strong Us Investment, but Still a Weak Dollar? (Not a Contradiction)

Currently, foreign investors are still pouring money into US assets, and this is supporting the dollar. However, there's still a fall, but why? Although there's money coming in, there's also a huge pile of U.S. assets (stocks) that are already down. At the same time, the flow is tiny compared to the total value of US assets foreigners already hold. 

Final Thoughts...

Experts say the dollar is falling for geopolitical reasons, not for serious reasons like political attacks on the Fed. But markets are weak against the U.S., angering its allies, just as happened with the 2025 tariffs. History is repeating itself (now in the Greenland issue), and more because of the U.S.'s poor policy-making. Now, it has become more like a pattern. For more updates on the same, stay in touch. 

Dollar Falls 0.8% as US-Greenland Tensions Hit Global Stocks

- 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.”

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