Hedge funds run fast: The "Greenland Island dispute" had already lifted the bullish bet on the euro before it was resolved.

Just days before President Trump threatened to impose new tariffs on European countries and intensified his efforts to acquire Greenland, hedge funds liquidated their bullish positions on the euro. Data from the Commodity Futures Trading Commission (CFTC) shows that as of the week ending January 13, leveraged funds shifted their positions on the euro to net short. This marks the first bearish shift since late November last year, and the downward pressure on the euro may increase further unless an agreement is reached between the US and Greenland after Trump proposed the imposition of tariffs. Nick Twidale, chief analyst at AT Global Markets, said: "Hedge funds are keen to hold net short positions. If this 'dispute' looks like it is evolving into a full-blown trade war, they may consider increasing their positions." During the early Asian trading session on Monday, the euro fluctuated, highlighting market uncertainty in the future. Investors are concerned that a trade war could erupt again, potentially weakening European economic growth. Morgan Stanley previously warned that traders underestimate the risk of extreme scenarios leading to significant fluctuations in major currencies (especially the euro). The euro against the dollar initially fell by 0.2% before rebounding by 0.3% to 1.1628. Analysis suggests that the moderate decline in the euro may indicate that traders are also worried about the negative impact on the dollar. In a report, strategists Joseph Capurso and Carol Kong of the Commonwealth Bank of Australia wrote that due to the tense situation, "the euro-dollar exchange rate may test support at 1.1499 this week." They also stated, "the trade dispute over control of Greenland may escalate further before easing."