Just as markets were beginning to adjust to the situation in Venezuela, new geopolitical risks have emerged, which could leave markets on edge going into the weekend. The largest protests in years have erupted in Iran, with US President Donald Trump threatening to intervene once again. In parallel, Trump is renewing his push for the US to annex, or at least increase its influence over, Greenland, potentially heightening tensions with the EU. Both of these events could have significant impacts on the forex market.

Coming off the success of the detention of Venezuelan President Nicolas Maduro (who was widely not recognized following accusations of fraud in the previous election), Trump has pressed other regional issues. That includes Colombia, with President Gustavo Petro agreeing to meet with Trump in Washington to discuss migration and drug smuggling issues. This is part of the Trump Administration’s renewed focus on the Americas, with the potential for the largest impact arising from a realignment with Europe.
 

Why Greenland?

It’s no secret that the Trump Administration is pulling back support from Europe, as several officials – including Vice President JD Vance – have expressed frustration with the EU’s low defense spending. This implies the US focusing more on its nearest neighbors, which is illustrated by Washington’s renewed influence in the Americas, from bailing out Argentina to detaining Maduro, and now pressuring to have more influence over Greenland.

The island is an autonomous part of Denmark, a NATO ally of the US. The US also has an Air and Space Force base near the capital in Nuuk. However, China has expressed interest in Greenland and owns a rare-earth production facility there. In the past, China attempted to purchase abandoned military bases but was denied by Denmark. This is part of the argument the Trump administration uses to seek greater influence in the region. Additionally, the West Coast offers a route for Russian submarines to access the Eastern Seaboard from their base in Murmansk.
 

What’s Next?

Next week, US Secretary of State Marco Rubio is heading to Copenhagen, presumably to offer a proposal to the Danish government on US interests in Greenland. While Trump has publicly said he wants to “buy” Greenland – with Denmark saying it’s not for sale – a more likely approach will be increased US influence in the region, potentially building new military bases. However, a more aggressive opening bid could heighten tensions between the US and the EU, which supports Denmark’s claim to the territory and Greenlandic Autonomy.

Markets are also closely watching developments in Iran. The oil-rich nation has been suffering economic woes amid sanctions and droughts that have left the capital, Tehran, without critical supplies. Protests and their repression aren’t uncommon in Iran, but they are notable this time due to the scale and the fact that Trump has “warned” Iranian authorities not to shoot protestors in a show of support. So far, 42 people have died amid the protests.
 

How Unrest Could Affect Oil

There has been rampant press speculation that the protests could lead to regime change in Tehran. Authorities reportedly suspended internet access to quell the protests, making it harder for outside observers to gauge the situation. The concern among traders is that rising tensions in Iran could lead to military intervention in the Strait of Hormuz. About one-fifth of the global supply of petroleum transits the Straits.

Depending on what happens over the weekend, Iran could be a major focus for the markets next week. If protests escalate, then markets could move into risk-off mode, and oil prices could rise. If the situation calms down, crude prices could drop back as investors return to concerns about oversupply.

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