Forex analytics. The dollar was driven into the framework – ForexNews.PRO
We’ve played and that’s enough. The markets went from chaos and panic with TACO in just a couple of days. The failure of the S&P 500 was redeemed, Treasury yields fell, and the US dollar strengthened on Donald Trump’s statement that there was some kind of framework agreement on Greenland with NATO. He is not going to impose additional tariffs against individual European countries. The president of the United States backed down again, and investors liked it. As well as the “bears” on EURUSD.
What or who forced Donald Trump to back off? The skillful diplomacy of NATO Secretary General Mark Ruegge? But the Dutchman is not an official representative of Denmark, which owns Greenland. He is not authorized to conclude island purchase and sale transactions. Is the European Union suspending an earlier agreement with the United States on 15% tariffs? Or fears for a serious collapse of stock indexes? I believe that we are talking about a combination of factors.
In fact, the United States does not need Greenland, a cold island full of ice, which Donald Trump mistakenly called Iceland several times in his speech in Davos. But Americans are interested in deepening cooperation with NATO on Arctic security issues. In 2025, the owner of the White House quickly retreated from his threats when China retaliated with blow after blow. Europe has done it now.
A large-scale drop in the S&P 500 would be a serious blow to the US economy. About half of all consumer spending is associated with the top 10% of American households by income. About 31% of all assets of the rich are in stocks. Their share has doubled in the last 30 years.
The US dollar was supported not only by TACOS, but also by the Supreme Court’s skepticism about Donald Trump’s ability to fire Lisa Cook. If this happens, the precedent will allow future presidents to change the composition of the FOMC like gloves. Most likely, the governor will remain in office until the lower courts consider her mortgage case. We are talking about several months.
There will be no more “pigeons” in the Committee. This means that the pause in the Fed’s monetary policy easing cycle risks dragging on until June. The futures market still expects a rate cut in early summer and two acts of monetary expansion in 2026.
In my opinion, the implementation of the “Trump always backs down” strategy and the preservation of independence by the Federal Reserve bring Forex back to monetary policy. And there, the Fed’s intention to sit and see how events would develop, at least until June at the beginning of the year, resulted in a strengthening of the US dollar.
