The US dollar is poised for its worst week in a year, as President Donald Trump's Greenland saga continues to rattle investors. Trump's deal with NATO, which grants the US access to Greenland, has sparked a wave of uncertainty. The dollar index, which measures the US currency against six units, has dropped 0.58% in the previous session, on course for a 1% slide, its worst performance in a week since January 2025. The euro is steady at $1.1751, hovering near the three-week high it touched earlier this week, while sterling fetches $1.3496, near a two-week high hit in the previous session. The yen is under pressure, wobbling near one-week lows ahead of the Bank of Japan policy decision. The central bank is expected to keep rates steady, but the spotlight will be on Governor Kazuo Ueda's comments to gauge the next hike and any hawkish tilt from policymakers to support the yen. The yen has been under relentless pressure since Sanae Takaichi took over as Japan's prime minister in October, dropping over 4% on fiscal concerns. Data on Friday showed Japan's core consumer inflation slowed in the year to December but stayed above the central bank's 2% target, keeping alive market expectations of future interest rate rises. A bond market rout this week underscored investor nerves about Japan's fiscal position as Takaichi called a snap election and promised tax cuts, sending Japanese government bond yields to record highs. The Australian dollar is steady at $0.6841, while the New Zealand dollar is 0.25% weaker at $0.5914. Bitcoin advanced 0.37% to $89,518.13, inching away from the week low it touched earlier this week. But here's where it gets controversial: Thierry Wizman, global FX & rates strategist at Macquarie Group, says that while a Greenland deal solves the immediate problem of tariffs and invasion, it doesn't solve the core issue of the seeming alienation of allies from one another. And that's not a good place to be if you want to preserve the USD's reserve-currency status. The BOJ decision will be a key focus, with investors watching for any hawkish tilt from policymakers to support the yen. The spotlight will be on Governor Ueda's comments to gauge the next hike and any potential intervention by Tokyo to support the yen. The question remains: will the BOJ's monetary policy be enough to anchor the market and support the yen's value?
