The US Dollar Index (DXY), tracking the greenback against six major currencies, extends its gains for a second consecutive session, trading around 98.60 during Monday’s Asian hours. Traders are eyeing the ISM Manufacturing PMI release later in the day for further guidance on the US economic outlook.
The US Dollar is benefiting from safe-haven demand amid renewed geopolitical tensions following the US military operation in Venezuela and the capture of President Nicolás Maduro. Over the weekend, CNN reported that the Trump administration conducted a “large-scale strike” in Venezuela, detaining Maduro to face charges, without congressional approval. President Trump stated that the US would oversee Venezuela until a “safe, orderly, and judicious transition” is achieved.
Adding to market uncertainty, The Guardian reported on Monday that Trump warned of a potential second intervention if Venezuela’s interim president, Delcy Rodríguez, fails to comply with US demands. The President also commented on Colombia’s leadership, floated the idea of “Operation Colombia,” criticized Mexico for inaction, and suggested that Cuba could be close to collapse. These developments have heightened risk aversion, boosting demand for the USD.
Fed outlook supports the dollar
Market participants are also pricing in the possibility of two additional Federal Reserve rate cuts in 2026. The Fed lowered its benchmark target range by 25 basis points in December 2025 to 3.50%–3.75%, completing a cumulative 75 bps of cuts during the year amid a cooling labor market and persistent inflation pressures.
Minutes from the December FOMC meeting indicated that most participants saw it as likely appropriate to pause further cuts if inflation continues to ease. Meanwhile, speculation that President Trump may nominate a new Fed chair to replace Jerome Powell in May has added uncertainty, with potential implications for a more dovish policy stance and further support for the US Dollar in the near term.
Overall, the DXY’s advance reflects a combination of geopolitical safe-haven flows and market positioning ahead of key US macro releases, particularly the ISM Manufacturing PMI later today.
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