The US dollar began the first full trading week of 2026 with a broad-based rally, rising to a three-and-a-half-week high against the euro and hitting two-week peaks versus the yen, Swiss franc and Canadian dollar.
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Currency markets largely looked past the United States’ weekend raid in Venezuela and the capture of President Nicolas Maduro, with traders instead focusing on a series of key US economic indicators due this week that could influence the Federal Reserve’s policy direction.
The dollar strengthened 0.3 per cent to $1.1682 per euro, after earlier touching its strongest level since December 10 at $1.1672. It also climbed to 157.295 yen, 0.7951 Swiss franc and C$1.37771, marking the highest levels against those currencies since December 22.
Kyle Rodda, senior financial markets analyst at Capital.com, said foreign exchange markets were more influenced by expectations around US data than geopolitical risks. He noted that recent resilient US economic figures have prompted markets to reassess the pace of interest rate cuts in 2026.
The week’s data calendar begins with ISM manufacturing figures on Monday and concludes with the closely watched monthly non-farm payrolls report on Friday. According to LSEG calculations based on futures pricing, traders are currently pricing in two US interest rate cuts this year.
Investors are also watching closely for US President Donald Trump’s announcement of the next Federal Reserve chair, with Jerome Powell’s term set to end in May. Trump has said he will name his pick this month and indicated the successor would favour significantly lower interest rates.
Elsewhere, Bank of Japan Governor Kazuo Ueda reiterated on Monday that the central bank will continue to raise interest rates if economic growth and inflation evolve in line with its forecasts. Japan’s central bank raised rates to a three-decade high in December.
The dollar also edged up 0.1 per cent to $1.3425 per British pound and gained 0.3 per cent to $0.6670 against the Australian dollar.
