US President Donald Trump is set to give a keynote address at the World Economic Forum in Davos at 13:30 GMT. His travel to Davos experienced a delay due to an “electrical issue” with Air Force One.<\/p>\n
The speech is expected to provide insights into the US government’s stance on Greenland, as Trump continues to pressure EU nations who oppose US plans for Greenland. These actions have led to the imposition of 10% tariffs on several EU countries, with the potential for these to rise to 25%.<\/p>\n
In response, EU members have indicated readiness to implement countermeasures, describing the tariffs as a form of coercion. Leaders globally have criticised the additional US tariff threats, seeking a more cooperative international approach.<\/p>\n
Trump’s comments on Greenland could impact the EUR\/USD currency pair. Hostile rhetoric from Trump could ignite tensions, possibly weakening the US dollar and affecting trade relations. Conversely, a softer stance might relieve tensions, benefiting risky assets and the US dollar.<\/p>\n
The US Dollar remains the world’s most-traded currency, accounting for over 88% of global forex turnover. The Federal Reserve’s monetary policy, including quantitative easing and tightening, plays a major role in influencing the USD.<\/p>\n
We are now a year on from the January 2025 Davos speech where the White House outlined its aggressive stance on Greenland, sparking a trade conflict. Those 10% tariffs on key EU members went into effect, and as threatened, were raised to 25% later that summer. The EU retaliated with its own targeted duties, creating a year of transatlantic economic friction that has reshaped market dynamics.<\/p>\n
This prolonged trade dispute has revealed a clear divergence in economic resilience. While we saw initial dollar weakness following the 2025 speech, the US economy ultimately weathered the tariffs better than expected, with recent data showing Q4 2025 GDP growth at a solid 2.1%. In contrast, the Eurozone economy, particularly Germany’s export-driven model, has struggled, posting a meager 0.4% growth in the same period.<\/p>\n
The different economic paths have forced the hands of central banks. With US core inflation remaining stubbornly above target at 3.5%, the Federal Reserve has had little room to consider rate cuts. The European Central Bank, however, is facing disinflationary pressure as recent Eurostat figures show headline inflation has fallen to 2.3%, increasing speculation of monetary easing in the coming months.<\/p>\n
This policy divergence has pushed EUR\/USD down significantly from the 1.1700 level seen a year ago; it currently trades near 1.0820. The old support levels we watched in 2025, like the trendline near 1.1533, now represent distant and formidable resistance. The market structure has clearly shifted in favor of the dollar over the past twelve months.<\/p>\n
For the coming weeks, we see opportunity in selling out-of-the-money call options on EUR\/USD. This strategy allows traders to collect premium, capitalizing on the view that the pair is unlikely to stage a significant rally above key resistance levels like 1.1000. It’s a way to express a bearish-to-neutral view while defining risk.<\/p>\n
The ongoing, albeit low-level, trade tensions keep implied volatility sensitive to political headlines. This means the premium received from selling these options can be attractive. This approach benefits not just if the euro weakens, but also if it simply stays range-bound, allowing the value of the options to decay over time.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Trump’s Davos speech may affect USD and EU ties amid Greenland tensions and potential tariff escalation.<\/p>\n","protected":false},"author":62,"featured_media":16960,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-39750","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/39750","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=39750"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/39750\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16960"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=39750"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=39750"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=39750"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}