The US dollar falls to a two-week low! Greenland dispute escalates, causing ongoing turmoil in the currency market.

As US President Trump shows no sign of backing down in his efforts to control Greenland and threatens to impose new tariffs on France, the US dollar exchange rate has dropped to its lowest level in two weeks, while hedging costs have risen accordingly. The Bloomberg Dollar Spot Index fell to its weakest level since January 6 and is set to mark its worst two-day performance in about a month. The Euro climbed to its highest level in nearly two weeks, while the Swiss Franc led gains among G10 currencies. Trump's threat to impose tariffs on European countries opposing his plan to take Greenland from Denmark has sparked concerns in the market about a major trade conflict. Meanwhile, following French President Macron's refusal to join his latest peace proposal, Trump has suggested the idea of imposing 200% tariffs on French wines and champagnes. As the market situation with the simultaneous weakening of the US dollar and rising hedging costs reemerges, short-term exchange rate volatility continues to increase. Trading volume for Euro options has significantly increased, reflecting both the market's demand for risk hedging and investors' willingness to bet on the recent appreciation of the Euro - signaling the Euro is undergoing its most acute bullish repricing since early August last year. Jim Reid, Global Macro Strategist at Deutsche Bank in London, stated in a report, "The market has reacted, but if the rhetoric escalates further, there is clearly more room for volatility in exchange rates." US Treasury Secretary Mnuchin called for calm in the market on Tuesday and refuted the idea that "Europe might sell off US Treasuries and other dollar assets if the Greenland-related dispute escalates." While this scenario is unlikely, investors have begun openly discussing this extreme retaliatory measure, highlighting how retaliatory actions are becoming a potential tail risk affecting the market and the US dollar exchange rate. In terms of fund flows, the options market positions tend to be shorting the US dollar. Data from US deposit trust and clearing companies show that since the opening of trading this week, investors have been more inclined to establish long positions on the Euro and Australian Dollar against the US dollar.