Trump’s Greenland tariffs, Joe Biden’s victory to Debt ceiling deal - Key events that moved the dollar in recent years

The US dollar has witnessed heightened volatility this week amid uncertainty and unpredictable US policymaking. The dollar is poised for its worst week since June as unpredictable US policymaking weighed on the currency.

The dollar index, which measures the US currency against six units, was at 98.366 after dropping 0.58% in the previous session, on course for a 1% slide, its worst weekly performance since June 2025.

Sentiment remained under pressure due to changing geopolitical developments. US President Donald Trump said he had secured access to Greenland through a deal with NATO, while backing off earlier tariff threats against Europe and ruling out the use of force to take the Danish autonomous territory.

Political developments have long been a powerful catalyst for currency markets, and recent years have underscored just how sensitive the US dollar has become to shifts in policy, leadership, and geopolitical risk.

A new study by forex brokerage BrokerChooser highlights the political moments that triggered the sharpest moves in the USD against the euro, revealing how investors rapidly recalibrate risk during periods of uncertainty.

From presidential inaugurations and trade wars to emergency stimulus packages and tariff threats, the data shows that markets often react not just to economic fundamentals, but to the policy signals embedded in political events.

Tariffs, geopolitics and fresh pressure on the dollar

The latest bout of volatility came on January 19, 2026, after President Donald Trump confirmed he would “100%” follow through on his threat to impose tariffs on European countries opposing a US takeover of Greenland. The announcement pushed the dollar down 0.17% against the euro in a single day.

While modest compared to historic shocks, the move was significant in context. Since Trump first floated the tariff threat on January 17, the dollar has weakened by 0.32%, suggesting growing investor discomfort over escalating trade tensions and geopolitical brinkmanship. Markets were further unsettled after Trump refused to rule out the use of military force, reinforcing concerns around policy unpredictability.

Inaugurations and trade wars: the biggest hits to the USD

According to BrokerChooser’s analysis, the sharpest single-day fall in the dollar occurred on January 20, 2025, the day of Trump’s inauguration as the 47th US President. The USD plunged 1.38% against the euro, as investors reassessed potential policy risks and uncertainties.

Trade wars have been another major source of downside pressure. On April 11, 2025, the dollar slid 1.16% after China retaliated with 125% tariffs on US goods, reigniting fears of a prolonged economic standoff between the world’s two largest economies.

The third-largest decline came during the early days of the COVID-19 crisis. On March 27, 2020, the signing of the $2.2 trillion CARES Act sent USD/EUR down 1.07%. While the stimulus was designed to stabilise the economy, the sheer scale of government spending raised short-term concerns around debt, deficits, and inflation.

The data shows that recurring political flashpoints have consistently pressured the dollar. US debt ceiling standoffs, midterm elections, and large fiscal packages — including the $1.9 trillion American Rescue Plan in March 2021 — all triggered notable but smaller declines in USD/EUR.

Even events traditionally viewed as stabilising, such as Federal Reserve rate hikes, have occasionally coincided with dollar weakness, reflecting the market’s tendency to focus on forward guidance and broader macro risks rather than the headline decision alone.

When politics strengthens the dollar

Not all political shocks weaken the greenback. The strongest single-day gain came on November 6, 2024, following Trump’s re-election victory speech, when the dollar surged 1.85% against the euro. Initial market optimism was driven by expectations of pro-business policies, deregulation, and tax incentives.

Similarly, during periods of acute global stress, the dollar has benefited from its safe-haven status. On March 13, 2020, when the US declared a national emergency over COVID-19, USD/EUR rose 0.68%, as investors sought liquidity and capital preservation amid market turmoil.

More recently, the dollar gained 0.30% on November 4, 2025, following the New York City mayoral election, which markets interpreted as a stabilising signal for regulatory and political continuity in the US’s largest financial centre.

A currency increasingly driven by policy signals

The contrasting reactions highlight a critical theme: the dollar’s performance is increasingly shaped by how markets interpret political intent rather than the events themselves. Optimism around growth and reform can drive sharp rallies, but uncertainty around tariffs, debt, and geopolitical conflict tends to trigger swift pullbacks.

Commenting on the findings, Adam Nasli, Head Broker Analyst at BrokerChooser, noted that while the dollar remains anchored by its reserve-currency status and deep capital markets, recent years have exposed heightened sensitivity to policy risk.

“The dollar’s trajectory has been shaped not only by economic fundamentals but also by policy developments – including fiscal dynamics, tariff implications and questions around central bank independence – which have heightened sensitivity to shifts in investor confidence and risk appetite,” said Adam Nasli, Head Broker Analyst from brokerage and forex experts BrokerChooser.

As interest-rate differentials narrow and global central banks adjust their stances, investors are paying closer attention to fiscal dynamics, trade policy, and questions around institutional independence—factors that can quickly alter risk appetite.

What it means for forex markets

For forex traders and investors, the message is clear: political developments are no longer background noise. From tariff announcements to election outcomes, each event can act as a volatility trigger, reshaping currency trends in a matter of hours.

“Closely tracking macro data, Federal Reserve communication and broader risk dynamics is essential to understanding near-term dollar moves and positioning effectively across changing market conditions,” said Nasil.

As fears of trade wars and global slowdowns persist into 2026, the dollar is likely to remain on a rollercoaster — responding not just to economic data, but to the political decisions that increasingly define the global financial landscape.

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