USD weakens as Trump cancels Greenland tariffs, risk-on sentiment returns

The US dollar index has fallen 0.5% as risk appetite surged following President Trump's announcement of canceling proposed Greenland tariffs after productive NATO talks. Stock futures jumped to session highs, with S&P 500 futures gaining 1.2%, pressuring the safe-haven dollar lower. Trump indicated a framework for a future deal regarding Greenland and the Arctic region has been established with NATO Secretary General Mark Rutte. The move represents a significant de-escalation in trade tensions, boosting risk-sensitive currencies like AUD/USD (+0.7%) and NZD/USD (+0.6%). EUR/USD climbed 0.4% to 1.0875, while USD/JPY retreated 0.3% to 155.20 as traders unwound defensive positions. The development suggests reduced geopolitical uncertainty, potentially limiting dollar demand as a safe haven. Traders are now watching for further details on the Arctic deal framework and its implications for global trade dynamics and NATO relations.