The Dollar kicked off the first full trading week of 2026 by rising to multi-week highs against several major currencies following a soft December, as attention turned to this week’s slate of important economic data.
Traders were also monitoring developments in Venezuela after a US operation resulted in the capture of President Nicolas Maduro.
On Sunday, President Donald Trump told reporters he might authorise another strike to support US efforts to open the country’s oil sector and combat drug trafficking, and he also warned of potential military action in Colombia and Mexico.
Amid a tense geopolitical climate, the Dollar inched higher, although analysts cautioned that it may be too early to call this a sustained rally. The US monthly employment report, due on Friday, is expected to play a crucial role in shaping expectations for monetary policy, a key driver for the greenback.
The Dollar index rose for a fifth consecutive day, gaining 0.25% to reach its highest level since 10th December, primarily due to weakness in the Euro, which dropped 0.31% to $1.16845, its lowest since the same date.
The index had fallen 1.2% in December, marking its weakest monthly performance since August, Reuters news agency reports.
This week’s data releases start with Monday’s ISM manufacturing figures and conclude with Friday’s monthly non-farm payrolls report.
According to LSEG futures-based calculations, traders are currently pricing in two US rate cuts this year.
Investors are also watching for President Trump’s nomination for the next Federal Reserve chair, as Jerome Powell’s term expires in May. Trump has indicated he will announce his choice this month and has stated that Powell’s successor will be “someone who believes in lower interest rates, by a lot.”
Meanwhile, Bank of Japan Governor Kazuo Ueda stated on Monday that the central bank would keep raising interest rates if economic and inflation trends align with its forecasts. He has reiterated this position multiple times in recent months, including following December’s anticipated rate hike to a three-decade high.
The Dollar held steady against the Yen at 156.81, rose 0.34% against the Swiss Franc to 0.795, and gained 0.2% against both the Australian and New Zealand Dollars.