War for the island: why America needs Greenland

EUR/USD

Key zone: 1.1550 - 1.1650

Buy: 1.1680 (on strong positive fundamentals) ; target 1.1850; StopLoss 1.1620

Sell: 1.1580 (after retesting the 1.1650 level) ; target 1.1400; StopLoss 1.1640

The escalation of the dispute around Greenland is creating a serious geopolitical risk for Europe and transatlantic relations. A potential split within NATO poses a threat to regional security.

Trump publicly ignores a possible EU reaction, while justifying the pressure by the need to protect the island from a “Russian threat.”

U.S. foreign policy continues to follow Trump’s familiar ultimatum-driven, almost mafia-style logic. The administration’s actions are aimed at achieving results without regard for any obligations or long-term consequences.

Direct military pressure on a NATO member state is currently ruled out, as it could lead to the collapse of the alliance, the loss of U.S. military bases, restrictions on access to intelligence data and air routes to Europe, and could also undermine arms exports. Such scenarios find no support even within the Trump-loyal Pentagon.

Instead, economic pressure is being applied. Trump demanded Denmark’s consent to U.S. control over Greenland and announced the introduction of a 10% tariff on goods from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland starting February 1. From June 1, the rate is set to increase to 25%. The removal of tariffs is directly linked to the sale of the island.

Europe’s response and economic risks

• The European Union has suspended the ratification of the U.S.–EU agreement and called into question already achieved arrangements. Negotiations between the U.S. and the United Kingdom are at risk of collapse. This scenario threatens higher tariffs, reduced trade turnover, and slower economic growth on both sides of the Atlantic.
• The EU stated its readiness to introduce retaliatory tariffs on U.S. goods worth €93 billion. The possibility of applying the Anti-Coercion Instrument (ACI) was also confirmed, including restricting U.S. companies’ access to the European market.
• An additional risk lies in the U.S. financial dependence on European capital. European investors hold U.S. equities and bonds totaling around $8 trillion.
• Large-scale asset sales under a “sell America” scenario could put pressure on the dollar, Treasury yields, and the U.S. stock market as a whole. Outflows from dollar-denominated assets are already being recorded amid concerns about deteriorating economic prospects.

European officials expect that a tough stance will increase domestic political pressure on Trump. However, U.S. Treasury Secretary Bessent stated that Europe is unable to ensure Greenland’s security and confirmed that the U.S. refuses to retreat from its demands for control over the island.

So What Is the Outcome?

The escalation around Greenland has moved from the political sphere into the economic one and is forming a systemic risk for transatlantic relations and NATO’s security architecture. U.S. pressure through trade restrictions increases the likelihood of EU countermeasures and heightens the threat of a trade war capable of affecting all financial markets.

Market reaction remains moderate. S&P 500 futures fell by nearly 1%, European equity futures by more than 1.1%. Gold and silver updated their highs, while the dollar weakened against the Swiss franc and the yen, which retain their status as safe-haven currencies.

In the EUR/USD pair, buyers need consolidation above the 1.1650 level. Only in this case does the potential open for a test of 1.1675. Further movement toward 1.1700 is possible only with support from major market participants.

So we act wisely and avoid unnecessary risks.

Profits to y’all!