The U.S. dollar slipped slightly Friday, and was heading for its steepest weekly fall since June as intensifying geopolitical tensions weighed on U.S. assets.
At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded marginally lower at 98.170, heading for weekly losses of around 1%, its worst weekly performance since June 2025.
Investors continue to punish dollar
The dollar has taken the brunt of investor concerns over the shifting geopolitical landscape, as the Trump administration seems unconcerned about alienating its European allies.
The U.S. president may have agreed a deal over access to Greenland, rowing back on the threat of trade tariffs as well as the use of force to gain the island, but the move has left a very bitter taste in the mouths of many European officials.
Indeed, European Central Bank President Christine Lagarde was reported to have walked out from a high-profile dinner at the World Economic Forum in Davos following a speech by U.S. Commerce Secretary Howard Lutnick, which was heavily critical of Europe.
“Looking at price action in global FX markets right now, we would say there are three dominant themes,” said analysts at ING, in a note, pointing to a risk-on view of the global economy in 2026, the dollar debasement trade and weak fiscal positions
“The dollar looks on the wrong side of the ledger for all three themes,” ING added. “The challenge will be whether they continue to dominate – probably yes – or whether some better U.S. consumption/activity data can delay Fed cuts still further and give the dollar a short-term boost against the G10 low-yielders. Our preference is that the dollar decline happens from 2Q onwards.”
Pound gains on strong retail sales
In Europe, GBP/USD edged 0.1% higher to 1.3497, near a two-week high after the release of data showing British retail sales rose unexpectedly last month, adding to signs of a pickup in the U.K. economy.
Sales volumes rose by 0.4% in December from November, marking the first increase since September, and ahead of expectations of a fall of 0.1% in month-on-month terms.
Earlier, market research firm GfK said consumer confidence rose to its highest level since August 2024 as households became more positive about their own finances.
EUR/USD traded 0.1% lower to 1.1742, slipping back from the three-week high it touched earlier this week despite reasonably healthy activity data for the eurozone.
The eurozone composite PMI release came in at 51.5 in January, in expansionary territory, and unchanged from December.
“1.1770/1780 is intra-day resistance. Any unexpected break of resistance at 1.1810 would prompt us to reassess our neutral EUR/USD view this quarter,” said ING.


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