US Dollar Gains Amid Rising US-Venezuela Tensions

Short-Term Strength Amid Geopolitical Risks

The US dollar index (DXY) experienced a notable rise, reaching 98.74 and gaining 0.32% as tensions between the United States and Venezuela escalated ¹

. This strengthening was primarily attributed to a risk-off sentiment in the market, with investors turning to the dollar as a safe-haven asset.

Factors Limiting Dollar's Upside

Despite the current geopolitical tensions, analysts from PT Finex Bisnis Solusi believe that the dollar's strengthening is likely to be temporary ¹

. Several factors are expected to weigh on the dollar's performance in the longer term, including:

1. Expected Fed Rate Cuts in 2026: Market expectations of potential rate cuts by the Federal Reserve in 2026 could limit the dollar's upside ¹
   Source 1

   https://investasi.kontan.co.id/news/gejolak-as-venezuela-bikin-indeks-dolar-as-dxy-terangkat-tapi-dinilai-sementara
   .
2. High US Fiscal Deficit: The significant fiscal deficit in the United States is another factor that could potentially weaken the dollar over time ¹
   Source 1

   https://investasi.kontan.co.id/news/gejolak-as-venezuela-bikin-indeks-dolar-as-dxy-terangkat-tapi-dinilai-sementara
   .
3. Concerns Over Central Bank Independence: Ongoing concerns regarding the independence of the US central bank may also impact the dollar's value ¹
   Source 1

   https://investasi.kontan.co.id/news/gejolak-as-venezuela-bikin-indeks-dolar-as-dxy-terangkat-tapi-dinilai-sementara
   .

Continued Dollar Strength in Early Trading

The dollar's gains continued into Monday's trading session, with the currency reaching its highest level in three and a half weeks against the euro and two weeks against the Japanese yen ²

. This occurred despite the geopolitical developments over the weekend, including the capture of Venezuelan President Nicolas Maduro following a US operation ²

Source 2

https://internasional.kontan.co.id/news/dolar-menguat-senin-51-pasar-valas-abaikan-venezuela-dan-fokus-ke-data-ekonomi-as

.

Market Focus Shifts to US Economic Data

As the week progresses, market participants are expected to shift their focus towards a series of important US economic data releases. This shift in attention could potentially overshadow the current geopolitical tensions between the US and Venezuela ²

.