The dollar index dropped as much as 0.3% to 98.841 – reaching its lowest level since January 12 – as investors worried about exposure to U.S. markets

The dollar dropped for a second day in Asian trading on Tuesday after threats from the White House towards the European Union over the future of Greenland triggered a broad selloff across U.S. stocks and government bonds.

The dollar index, which measures the dollar’s strength against a range of other major currencies, dropped as much as 0.3% to 98.841 – reaching its lowest level since January 12 – as investors worried about exposure to U.S. markets.

On Monday, U.S. President Donald Trump’s renewed tariff threats against European allies triggered a repeat of the so-called “Sell America” trade that emerged after last year’s Liberation Day tariff announcement in April, with stocks, Treasury bonds and the dollar all declining. U.S. markets will return on Tuesday following a public holiday for Martin Luther King Jr. Day.

Investors were dumping dollar assets on “fears of prolonged uncertainty, strained alliances, a loss of confidence in U.S. leadership, potential retaliation and an acceleration of de-dollarisation trends,” said Tony Sycamore, market analyst at IG in Sydney.

While there are hopes the U.S. administration may soon de-escalate these threats, as it has with prior tariff announcements, it is clear that securing Greenland remains a core national security objective for the current administration, he added.

The euro was up 0.2% at $1.1663, while the British pound tacked on 0.1% to $1.3435.

The market still doubts tariff implementation, analysts from OCBC wrote in a research note. For now, potential de‑dollarisation flows outweigh the EUR and GBP negative impact of possible euro zone and UK growth downgrades should Trump’s tariffs materialise.