Dollar Strengthens as Traders Focus on U.S. Economic Data Despite Venezuela Tensions

The U.S. dollar started the first full trading week of 2026 on a strong note, rising to a three-and-a-half-week high against the euro and reaching a two-week peak versus the Japanese yen. Analysts note that the rally reflects market attention shifting toward upcoming U.S. economic indicators rather than geopolitical developments overseas.

Traders largely brushed aside weekend events in Venezuela, including a U.S. raid and the capture of President Nicolas Maduro, focusing instead on a busy week of U.S. macroeconomic data that could shape Federal Reserve policy. The dollar added 0.1% to $1.1704 per euro, reaching its highest level since December 11, and climbed 0.2% to 157.08 yen, peaking at 157.255 for the first time since December 22.

“I dare say the FX complex is not much of a reflection of risks stemming from Venezuela, but more about what the U.S. data is going to tell us about the Fed’s policy path,” said Kyle Rodda, senior financial markets analyst at Capital.com. Strong U.S. economic readings in recent months have sparked speculation that interest rate cuts may come more slowly than previously expected.

This week’s data calendar is closely watched, starting with Monday’s ISM manufacturing figures and culminating with Friday’s monthly non-farm payrolls report. Futures market calculations currently suggest that investors expect two rate cuts in the U.S. this year. Meanwhile, markets are also awaiting President Donald Trump’s announcement of the next Federal Reserve chair, as Jerome Powell’s term ends in May. Trump has indicated he will choose someone committed to significantly lower interest rates.

Elsewhere in the currency market, the dollar advanced 0.1% to $1.3443 per British pound and rose 0.1% to C$1.3745. In contrast, the Australian dollar fell 0.2% to $0.6682, reflecting a broader trend of dollar strength amid U.S. market optimism and uncertainty around global developments.

source: cnbc