Published by Global Banking & Finance Review®
Posted on January 19, 2026
3 min readLast updated: January 19, 2026
Add as preferred source on GoogleThe dollar fell as Trump threatened Europe with tariffs, leading investors to safe havens like the yen and Swiss franc. European currencies initially dropped but later recovered.
By Amanda Cooper
LONDON, Jan 19 (Reuters) - The dollar dipped on Monday as investors flocked to safe havens like the Swiss franc, after U.S. President Donald Trump's latest tariff threats against Europe over Greenland sparked a broad risk-averse move across markets.
Trump said over the weekend he would impose an additional 10% import tariff from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, until the U.S. is allowed to buy Greenland.
European leaders were scrambling to avert a trade war and agreed to intensify their efforts to dissuade Trump from imposing tariffs, while also preparing retaliatory measures should the duties go ahead.
After a brief overnight drop, European currencies including the euro, pound and Scandinavian crowns rose. The Swiss franc, a classic safe-haven, headed for its largest daily rise against the dollar in a month.
EURO BENEFITS FROM DOLLAR AVERSION
The euro was up 0.3% at $1.1638 in afternoon trading in Europe, while the pound was up 0.34% at $1.342 and the Norwegian crown strengthened, leaving the dollar down 0.2% on the day at 10.066.
The initial reaction among investors has been to sell the dollar, as they did when Trump unveiled sweeping tariffs on the world last April, triggering a crisis of confidence in U.S. assets.
While some movement of capital out of the dollar was evident on Monday, most notably with the Swiss franc's gains, analysts said a further escalation in tensions could see investors move their money back into the U.S. currency.
"It's not obvious to me that a trade war, if it escalates as a result of President Trump's reaction to his inability to get his hands on Greenland, is necessarily bad for the dollar. It's definitely worse for Europe. Europe exports more to the United States than the United States exports to Europe," Kit Juckes, chief FX strategist at Societe Generale, said.
YEN STILL IN INTERVENTION ZONE
The dollar was down 0.7% on the day at 0.797 Swiss francs, and down 0.14% against the Japanese yen, another non-U.S. safe-haven, at 157.9 yen.
Domestic Japanese politics have hampered the yen in recent weeks, with a looming snap election raising expectations of greater fiscal stimulus. With the yen trading around its weakest since mid-2024, the risk of official intervention is high, not least because of the verbal warnings from Tokyo in the last couple of weeks.
"We still remain sceptical of intervention being successful on a sustained basis and would need fundamental supportive yen factors to play out as well. Moves in yen today are certainly more contained," Derek Halpenny, MUFG's head of research for global markets EMEA, said in a note.
Cryptocurrencies, often a barometer of investor risk sentiment, tumbled. Bitcoin was down 2.5% just below $93,011, while ether fell 3.8% to $3,213.
Data on Monday showed China's economy grew 5.0% last year, meeting the government's target by seizing a record share of global demand for goods to offset weak domestic consumption.
The onshore yuan climbed to a 32-month peak of 6.9630 per dollar, shrugging off the mixed data, after China's central bank set its strongest daily fixing in more than two years.
(Additional reporting by Sophie Kiderlin in London and Rae Wee in Singapore. Editing by Mark Potter and Hugh Lawson)
Foreign exchange, or forex, refers to the global marketplace for trading national currencies against one another. It is essential for international trade and investment.
Cryptocurrencies are digital or virtual currencies that use cryptography for security. They operate on decentralized networks based on blockchain technology.
Economic growth is the increase in the production of goods and services in an economy over a period of time, typically measured by GDP.
Risk management involves identifying, assessing, and prioritizing risks followed by coordinated efforts to minimize, monitor, and control the probability of unfortunate events.
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