Published: Monday, January 19, 2026 · 2:48 AM | Updated: Monday, January 19, 2026 · 2:48 AM
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(Bloomberg) — US President Donald Trump’s trade threats toward European governments over Greenland raise the possibility the latter may trim their holdings of US assets, supporting the euro, according to a Deutsche Bank AG strategist.
Europe is the US’s largest lender with its countries owning $8 trillion of US bonds and equities, almost twice as much as the rest of the world combined, George Saravelos, Deutsche Bank’s global head of FX research, wrote in a note to clients on Sunday.
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“In an environment where the geoeconomic stability of the western alliance is being disrupted existentially, it is not clear why Europeans would be as willing to play this part,” he said. “Developments over the last few days have potential to further encourage dollar rebalancing.”
Trump’s new tariffs on European countries over Greenland could also be a catalyst for greater European political cohesion, also suggesting that any negative fallout on the euro against the dollar this week may be short-lived, Saravelos said.
While the common currency opened lower against the dollar Monday, it subsequently rallied to trade 0.2% stronger on the day at $1.1619, as of 10:47 a.m. Singapore time. US and European equity index futures both fell.
“The key thing to watch over the next few days” is whether the European Union activates its anti-coercion instrument, Saravelos said. French President Emmanuel Macron will request that, according to a person close to the president who requested anonymity to comply with government rules.
“With the US net international investment position at record negative extremes, the mutual inter-dependence of European-US financial markets has never been higher,” Saravelos said. “It is a weaponization of capital rather than trade flows that would by far be the most disruptive to markets.”
–With assistance from Paul Dobson.
(Updates with market moves in fifth paragraph)
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