A dramatic selloff in U.S. dollar assets swept through global markets on Tuesday, January 20, 2026, as geopolitical tensions over Greenland sparked the most significant single-day dollar decline in over a month. The currency’s sharp downturn reverberated across multiple asset classes, highlighting renewed investor anxiety about American economic policy direction.
The U.S. Dollar Index plummeted by 0.7%, representing its most substantial daily drop since mid-December. This decline was primarily triggered by the White House’s renewed threats toward European allies regarding Greenland’s future status, which simultaneously pressured U.S. stocks and government bonds while boosting the euro and British pound.
Market analysts identified this movement as a resurgence of the ‘Sell America’ trade pattern that initially emerged following last April’s ‘Liberation Day’ tariff announcements. Tony Sycamore, market analyst at IG in Sydney, noted that investors are rapidly divesting from dollar-denominated assets due to ‘fears of prolonged uncertainty, strained alliances, and potential acceleration of de-dollarization trends.’
The euro surged 0.8% to $1.1742, marking its strongest daily performance since September, while the pound gained 0.24% to trade at $1.346. Sterling received additional support from UK labor market data showing unemployment holding at a five-year high but with stabilizing vacancy numbers.
Currency markets exhibited broad-based movements beyond major pairs. The Japanese yen recovered from overnight losses as European trading commenced, with the dollar declining 0.3% to 157.68 yen amid political uncertainty following Prime Minister Sanae Takaichi’s call for snap elections on February 8. The Swiss franc, traditionally a safe-haven asset, strengthened for a third consecutive day, pushing the dollar down 1.1% to 0.7885 francs.
In Asian markets, the offshore Chinese yuan held steady at 6.952 per dollar, its weakest level since May 2023, following the People’s Bank of China’s decision to maintain benchmark lending rates unchanged for an eighth consecutive month. The Australian dollar advanced 0.48% to $0.675, approaching its strongest position since October 2024, while the New Zealand dollar climbed 0.77% to $0.584, reaching its highest level this year.
Cryptocurrencies mirrored the traditional market turbulence, with Bitcoin falling 2% to $91,090 and Ether declining 3.3% to $3,104.
Despite the dramatic market movements, some analysts suggested the ‘Sell America’ effect might prove temporary. Barclays strategist Lefteris Farmakis observed that ‘tariff threats are a marginal negative for the dollar in the near-term given long positions and still-low hedge ratios from a historical perspective,’ while cautioning that major escalation with NATO implications would present more significant challenges for the euro.