Pentagon orders withdrawal of 5,000 U.S. troops from Germany as Trump escalates feud with Merz

The Pentagon will withdraw 5,000 U.S. troops from Germany — part of a force-posture review tied to President Trump’s dispute with German Chancellor Friedrich Merz over Iran and other issues. The pullback is to be completed over the next 6–12 months. The move adds a geopolitical and political risk element for Europe, potentially weighing on the euro if investors view U.S.-German tensions and reduced U.S. presence as weakening European security cohesion. Markets may reassess Germany-specific risk, defense spending outlooks and NATO dynamics; any escalation or broader troop reductions could prompt safer‑haven flows that support the dollar and pressure EUR/USD. Near-term market impact is likely to be limited absent wider escalation, but the announcement raises a medium-term geopolitical downside risk for the euro.