The U.S. dollar retreated Monday as traders sought safety elsewhere following President Donald Trump’s tariff threats against Europe over Greenland. The Dollar Index fell 0.2% to 99.050. Trump proposed a 10% tariff on goods from several European nations, rising to 25% in June if no agreement is reached for the U.S. to gain control of the Danish territory.

The move adds to political risk premia, pressuring the greenback. Media reports suggest the European Union may revive a €93 billion package of retaliatory tariffs, escalating transatlantic trade tensions. Investors are wary of chasing themes seen as noisy rhetoric before diplomacy plays out, though the developments add volatility to an otherwise calm market.

In Europe, the euro gained 0.3% to 1.1630, benefiting from the dollar's weakness. The eurozone's annual inflation is due to be confirmed at 2.0%, hitting the European Central Bank's target for the first time since mid-2025. Sterling also edged higher, with key U.K. unemployment and inflation data scheduled for release this week.