USD/JPY drops to near 157.80 as US-EU disputes batter US Dollar

• USD/JPY falls to near 157.80 as the US Dollar extends its downside.
• US-EU disputes keep battering the US Dollar.
• Japan PM Takaichi announces snap election, and vows to cut consumption tax.

The USD/JPY pair is down 0.2% to near 157.80 during the European trading session on Tuesday. The pair is under pressure as the US Dollar (USD) underperforms across the board amid ongoing disputes between the United States (US) and the European Union (EU) over Greenland’s sovereignty.

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.56% lower to near 98.45.

The US Dollar faces intense selling pressure as US President Donald Trump's tariff threats on several EU nations and the United Kingdom (UK), in an attempt to pressure the continent to allow Washington to purchase Greenland, have raised concerns about the long-term state of relations with the continent.

However, US Treasury Secretary Scott Bessent has confirmed in his comments at the World Economic Forum (WEF) in Davos that Washington doesn’t intend to withdraw NATO’s membership.

US Treasury Secretary Bessent also stated that White House will announce the Federal Reserve’s (Fed) Chair Jerome Powell’s successor as early as next week.

Though the Japanese Yen (JPY) is outperforming the US Dollar, the former is underperforming its other peers as Japan's Prime Minister (PM) Sanae Takaichi’s plans to cut the consumption tax point to looser fiscal conditions going ahead.  

Japan's PM Takaichi announced plans to dissolve the parliament’s lower house on January 23, and vowed to suspend the consumption tax for two years.

Going forward, the major trigger for the Japanese Yen will be the Bank of Japan’s (BoJ) monetary policy announcement on Friday.