A US delegation led by JD Vance and Marco Rubio meets Danish and Greenlandic officials today, but markets have so far priced little risk from US threats, leaving only modest scope for any geopolitical premium to unwind, ING's FX analyst Francesco Pesole notes.

EUR/USD downside intact despite potential constructive headlines

"A US delegation, including JD Vance and Marco Rubio, will meet today with officials from Denmark and Greenland. So far, the US threats regarding Greenland have had little discernible market impact – beyond some moves in EUR/DKK forwards – so there is limited risk premium to unwind even if the talks point toward a cooperative outcome. Still, any progress could remove a lingering geopolitical 'black swan' risk for European currencies."

"Indeed, there appears to be some room for a deal. That would likely hinge on the US stepping back from any notion of 'ownership' of Greenland – an idea strongly opposed by both Denmark and Greenland – in exchange for a combination of economic partnerships and an expanded US military presence."

"Constructive headlines could slow the EUR/USD decline a touch, but we continue to target 1.1600 in the coming days."