22.01.202610:39 Forex Analysis & Reviews: Situation with Greenland remains complicated

Despite a slight easing of tensions, the situation with Greenland remains complicated. Yesterday, in response to threats from Donald Trump — including his intention to acquire Greenland and to impose trade tariffs on the EU — European Council President Antonio Costa convened an emergency summit of leaders from the EU's 27 member states. The summit's purpose is to discuss retaliatory measures to Trump's actions and to develop a strategy regarding Greenland.

Costa condemned Trump's threats, calling them a challenge to Europe's security, principles and prosperity, and said the EU is ready to protect its members from any pressure. As possible responses, the EU is considering suspending ratification of a trade agreement with the US and is drawing up a large investment program for Greenland. Plans also call for strengthening the island's security in cooperation with the UK, Canada, Norway and Iceland. These steps demonstrate Europe's determination to resist pressure from the US, defend its interests and support its partners.

Some time after speaking at the Davos summit, Donald Trump said that following a productive meeting with NATO Secretary?General Mark Rutte, a framework for a future agreement on Greenland and the wider Arctic had been reached. Trump said implementing this agreement would be a major success for the US and NATO countries. In light of this development, the tariffs scheduled for February 1 are being cancelled.

Trump also mentioned further talks concerning a so?called "Golden Dome" related to Greenland and promised to provide more information as negotiations progress. Details about the "Golden Dome," like the framework agreement on Greenland, were not specified.

Trump's statement produced a broad reaction, easing pressure on risk assets and helping the U.S. dollar recover. The cancellation of the tariffs planned for February 1 is being seen as a positive signal that trade tensions may ease and transatlantic ties may strengthen. However, details of any agreement on Greenland and the Arctic remain unclear, which raises many questions and fuels speculation.

Any Arctic agreement must take into account the interests of all stakeholders, including indigenous peoples, and comply with international law. The mysterious reference to the "Golden Dome" has attracted the most interest and spawned many theories. Some suggest it may involve mineral?resource development, others a strategic military facility, and still others a scientific research project. The lack of concrete information only fuels speculation and intrigue.

Technical outlook for EUR/USD

On the technical side for EUR/USD, buyers now need to think about taking the 1.1710 level. Only that would make a test of 1.1740 realistic. From there, a move to 1.1765 is possible, but reaching that without support from major players will be quite difficult. The far target is 1.1785. On the downside, I would expect significant buying only around 1.1670. If there's nobody there, it would be better to wait for a new low at 1.1640 or to open long positions from 1.1610.

Technical outlook for GBP/USD

For GBP/USD, pound buyers need to take the nearest resistance at 1.3435. Only then will a move toward 1.3465 be realistic, and breaking above that will be quite difficult. The far target is around 1.3490. On the downside, bears will try to seize control of 1.3405. If they succeed, a range breakout would be a serious blow to bulls and could push GBP/USD to 1.3380 with the potential to extend to 1.3360.