The dollar experienced a decline for the second consecutive day during Asian trading on Tuesday, following threats from the White House directed at the European Union regarding the future of Greenland, which prompted a widespread selloff in U.S. stocks and government bonds. The dollar index, which gauges the strength of the greenback against a basket of six currencies, decreased by as much as 0.2% to 98.891 – marking its lowest level since January 13 – amid investor concerns regarding exposure to U.S. markets. On Monday, U.S. President Donald Trump’s renewed tariff threats against European allies led to a resurgence of the “Sell America” trade that surfaced following last year’s Liberation Day tariff announcement in April, resulting in declines across stocks, Treasury bonds, and the dollar. The U.S. markets are set to resume trading on Tuesday after the observance of Martin Luther King Jr. Day.

Investors were selling off dollar assets due to concerns over “prolonged uncertainty, strained alliances, a loss of confidence in U.S. leadership, potential retaliation and an acceleration of de-dollarisation trends,” stated Tony Sycamore. While there are expectations that the U.S. administration might soon mitigate these threats, similar to previous tariff announcements, it is evident that securing Greenland continues to be a fundamental national security goal for the current administration,” he noted. The yield on the U.S. 10-year Treasury bond increased by 3.0 basis points, reaching 4.2586%. According to the sources, Fed funds futures indicate a 95% probability that the U.S. central bank will maintain its current stance at the upcoming two-day meeting, showing minimal change since Friday.

The euro was last observed at $1.1658, reflecting a 0.1% increase, while the British pound also saw a 0.1% rise to $1.3437.“The market still doubts tariff implementation,” analysts wrote in a research note. “Currently, the potential flows of de-dollarisation are more significant than the negative effects on the EUR and GBP that could arise from potential growth downgrades in the Eurozone and U.K. if Trump’s tariffs come into effect.” In relation to the yen, the dollar was last observed down 0.1% at 157.905 yen following the announcement by Japanese Prime Minister Sanae Takaichi regarding snap elections scheduled for February 8. The commitment to halt an 8% sales tax on food for a two-year period has brought scrutiny to the nation’s fragile public finances.

Meanwhile, the Japanese currency remained relatively stable following a government bond auction for 20-year securities that experienced weak demand on Tuesday. In relation to the Chinese yuan trading offshore in Hong Kong, the dollar experienced a decline of 0.1%, settling at 6.9540 yuan, marking the lowest point for the greenback since May 2023. The People’s Bank of China maintained benchmark lending rates at the same level for the eighth consecutive month in January, aligning with the expectations of analysts surveyed by Reuters. On Tuesday, Indonesia’s rupiah fell to a historic low of 16,985 against the dollar, as concerns grew among investors regarding the independence of the country’s central bank following President Prabowo Subianto’s nomination of his nephew to the Board of Governors of Bank Indonesia. The Australian dollar increased by 0.2% to $0.6727, whereas the New Zealand dollar rose by 0.5% to $0.58265, marking its peak for the year.