The US dollar (USD) underperformed its major counterparts at the start of the week amid disagreements between economies on both sides of the Atlantic over Washington’s plans to acquire Greenland. At the time of writing, the US Dollar Index (DXY), which measures the value of the US currency against six major currencies, was down 0.25% to 99.15.
US dollar price today
The table below shows the percentage change in the US Dollar (USD) against the major currencies listed today. The US dollar was the weakest against the Swiss franc.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | -0.25% | -0.13% | -0.14% | -0.16% | -0.15% | -0.36% | -0.54% | |
| euro | 0.25% | 0.12% | 0.11% | 0.09% | 0.10% | -0.11% | -0.29% | |
| GBP | 0.13% | -0.12% | 0.00% | -0.03% | -0.03% | -0.23% | -0.41% | |
| JPY | 0.14% | -0.11% | 0.00% | -0.04% | -0.03% | -0.23% | -0.41% | |
| Canadian | 0.16% | -0.09% | 0.03% | 0.04% | 0.01% | -0.19% | -0.38% | |
| Australian dollar | 0.15% | -0.10% | 0.03% | 0.03% | -0.01% | -0.21% | -0.39% | |
| New Zealand dollar | 0.36% | 0.11% | 0.23% | 0.23% | 0.19% | 0.21% | -0.18% | |
| Swiss franc | 0.54% | 0.29% | 0.41% | 0.41% | 0.38% | 0.39% | 0.18% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select USD from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
US President Donald Trump on Saturday threatened to impose 10% tariffs on imports from several European Union members, in a post on Truth.Social, for opposing his plans for a “full and complete purchase of Greenland”, which will take effect from February 1.
European Commission (EC) President Ursula von der Leyen warned in a post on X that US President Trump’s plans to acquire Greenland could affect the territory’s “integrity and sovereignty” which could undermine “transatlantic relations”, risking a “dangerous downward spiral”.
This event may be unfavorable to US-EU relations in the long term, raising the possibility that the Old Continent will explore alternative means of trade, which could further undermine public acceptance of the US dollar.
Meanwhile, dovish comments from Federal Reserve Vice Chairman for Supervision Michel Bowman on US interest rate expectations are also a major drag for the US dollar. The Fed should be prepared to cut interest rates to their neutral level as labor market conditions remain fragile, Bowman said in a speech on Friday.
Frequently asked questions about the US dollar
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a large number of other countries where it is traded alongside local banknotes. It is the world’s most traded currency, accounting for more than 88% of total global forex trading volume, or an average of $6.6 trillion in transactions per day, according to 2022 data. After World War II, the US dollar took the place of the British pound as the world’s reserve currency. For most of its history, the US dollar was backed by gold, until the Bretton Woods Agreement in 1971 when the gold standard disappeared.
The most important factor affecting the value of the US dollar is monetary policy, which is shaped by the Federal Reserve. The Fed has two missions: achieving price stability (controlling inflation) and promoting full employment. The basic tool for achieving these two goals is adjusting interest rates. When prices rise too quickly and inflation is above the Fed’s 2% target, the Fed will raise interest rates, which helps the value of the US dollar. When the inflation rate falls below 2% or when the unemployment rate is very high, the Fed may cut interest rates, which affects the dollar.
In extreme cases, the Fed could also print more dollars and activate quantitative easing (QE). Quantitative easing is the process by which the Federal Reserve dramatically increases the flow of credit into a stuck financial system. It is a non-standard policy measure used when credit dries up because banks will not lend to each other (due to fear of the counterparty defaulting). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It has been the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis of 2008. This involves the Fed printing more dollars and using them to buy U.S. government bonds mostly from financial institutions. Quantitative easing usually leads to a weakening of the US dollar.
Quantitative tightening (QT) is the reverse process whereby the Fed stops purchasing bonds from financial institutions and does not reinvest capital from bonds it holds outstanding in new purchases. It is usually positive for the US dollar.
