Dollar's Surge: A Fresh Start to 2026 As Traders Eye Key Economic Data

The dollar surged to a near-four-week high as traders focus on key economic data despite geopolitical tensions involving Venezuela. President Trump hinted at military actions in Latin America. Economic data, such as the U.S. employment report, will likely impact monetary policy expectations. Investors await Trump's Federal Reserve chair pick amidst anticipated rate cuts.

The dollar kicked off 2026 with a notable rise, reaching its highest level in nearly four weeks against several major currencies. This comes on the heels of December's weaker performance, with markets turning a blind eye to geopolitical upheavals in Venezuela, following the capture of President Nicolas Maduro by U.S. forces.

Amidst this backdrop, President Trump has signaled potential military interventions in both Venezuela and neighboring countries should they fail to align with U.S. objectives of liberalizing oil sectors and countering drug trafficking. Upcoming economic indicators, such as Friday's U.S. employment report, are expected to significantly influence monetary policy prospects and, consequently, the dollar's trajectory.

The currency gained 0.16% against the Swiss franc, while the euro saw a dip. Marc Chandler of Bannockburn Global Forex LLC suggested a potential dollar upswing following December's downturn. With U.S. manufacturing activity unexpectedly contracting, discussions on monetary policy adjustments intensify as Trump's awaited Federal Reserve pick aims for lower rates.

(With inputs from agencies.)