The U.S. dollar hovered near six-week lows on Wednesday after President Donald Trump revived his controversial push to acquire Greenland. The dollar index fell 0.1% to 98.400, extending a 0.8% overnight drop. Markets are bracing for Trump's speech at the World Economic Forum in Davos, Switzerland, where the Greenland issue is expected to dominate.

Trump's renewed threats over the semi-autonomous Danish territory have injected fresh geopolitical risk into currency markets. Analysts at ING suggest a potential de-escalation during Trump's meetings with EU leaders in Davos could offer the dollar some relief. The currency remains under pressure amid broader concerns over U.S. trade and foreign policy direction.

Elsewhere, the British pound edged higher to 1.3442 after UK consumer inflation rose to 3.4% in December, above forecasts. The Bank of England is expected to hold rates steady next month. The Japanese yen steadied at 157.84 per dollar after a selloff in Japanese government bonds, driven by fiscal concerns under Prime Minister Sanae Takaichi.