Daily Market Update
January 21, 2026EUR/USD ranged from the low to mid 1.17’s overnight.The dollar edged up from three‑week lows against the euro and the Swiss franc on Wednesday as investors awaited U.S. President Donald Trump’s speech at Davos, after his tariff threats triggered a broad selloff in U.S. assets.
Growth will be the priority of the United States’ presidency of the Group of 20 industrialised nations, U.S. Treasury Secretary Scott Bessent said on Wednesday, after urging European partners to wait to hear what President Trump has to say on issues including Greenland.
A meeting between Trump and German Chancellor Friedrich Merz is now unlikely to take place due to the U.S. president’s late arrival.
The euro was down 0.10% at $1.1715 , having risen more than 1% in the last two sessions.
It hit $1.1770 on Tuesday, its highest level since December 30.
The safe-haven Swiss franc was down 0.13% to 0.7909 per dollar, after gaining about 1.5% between Monday and Tuesday.
“The next step in the ‘Greenland or Bust’ saga is to see whether a common ground, such as NATO joint administration of Greenland, can be reached, starting at Davos this week,” said Thierry Wizman, global forex and rates strategist at Macquarie Group.
“Until that happens the so-called primacy of the U.S. remains at risk of further dissolution, and with it, an upending of the geopolitical alignments that have upheld markets in recent years,” he added, recalling that the European Union may resort to significant trade measures.
French President Emmanuel Macron has pushed for the EU to consider the first use of its, informally known as the “trade bazooka”, which could limit U.S. access to public tenders or restrict trade in services such as tech platforms.
Macron said on Tuesday it was “crazy” it had gone that far.
An announcement by Danish pension fund AkademikerPension on Tuesday that it would sell its roughly $100 million holding of U.S. Treasuries by the end of the month added to speculation about further foreign investor selling.
Strategists also noted that Trump sounded somewhat more conciliatory, before leaving for Switzerland.
“I think we will work something out where NATO is going to be very happy and where we’re going to be very happy,” he told a news conference.
NATO Secretary General Mark Rutte said on Wednesday he was work “behind the scenes” to address tensions between the U.S. and its European allies.
The Swedish krona hit a fresh 4-year high versus the dollar at 10.099, up 0.35% on the day, as investors favoured countries with low debt levels.
The dollar was steady against the Japanese currency, which faced its own selloff after Prime Minister Sanae Takaichi on Monday called snap elections for February 8 and pledged measures to loosen fiscal policy.
The yen was roughly unchanged against the dollar at 158 this week despite the U.S asset selloff. Investors closely watched Japanese government bonds (JGBs) which were hit hard early this week, but rebounded on Wednesday.
“The absence of strategic buyers in this segment has made price action more sensitive and amplified volatility. I expect this environment of elevated volatility to persist through 2026,” said Vincent Chung, co-portfolio manager at T. Rowe Price.
The yen hit a record low of 200.20 per Swiss franc earlier in the session, last changing hands at 199.30.
“A further sell-off in JGBs would seem to drag the dollar/yen towards intervention territory at 159/160,” said Chris Turner, global head of markets at ING.
“However, if the yen sell-off is a self-inflicted wound from the Japanese government policy, the effectiveness of intervention will become increasingly questionable.”
Source: Reuters
