Dollar Advances with US Jobs Data, Supreme Court Ruling in View

The US Dollar Index (DXY) extended its gains past 98.60 in Asian trading hours, fueled by renewed geopolitical tensions and a cautious outlook toward the Federal Reserve's policy moves according to FXStreet. Investors are eyeing the upcoming ISM Manufacturing PMI data, which could provide additional clarity on the dollar's trajectory according to FXStreet. The index's performance comes amid heightened geopolitical uncertainty following the US capture of Venezuelan President Nicolas Maduro, which has triggered increased demand for safe-haven assets according to FXStreet.

The Trump administration's actions in Venezuela have intensified concerns over regional stability, prompting speculation about potential military interventions and broader implications for global oil markets according to FXStreet. This has contributed to a broader shift in risk appetite, with the dollar benefiting from its status as a safe-haven currency according to FXStreet.

At the same time, markets remain focused on the Federal Reserve's potential rate cuts in 2026, following a 25-basis-point reduction in December 2025 according to FXStreet.

Recent comments from Philadelphia Fed President Anna Paulson indicate that further rate cuts could occur if inflation continues to ease, though she emphasized that the current 3.50%-3.75% target range remains somewhat restrictive according to Morningstar. With the FOMC minutes suggesting a preference for standing on rate cuts if inflation cools, traders are adjusting their expectations accordingly according to FXStreet.

Why Did This Happen?

Renewed geopolitical tensions have significantly influenced the dollar's recent performance. The capture of Venezuela's president by US forces, as reported by CNN and The Guardian, has heightened global uncertainty and prompted increased demand for the dollar according to FXStreet. This follows a pattern of dollar strength during periods of geopolitical instability, as investors seek refuge in traditional safe-haven assets according to FXStreet.

The dollar's move is also supported by broader macroeconomic factors. The December 2025 rate cut and ongoing market cooling have led to expectations of two more cuts in 2026 according to FXStreet. These expectations have influenced investor sentiment, reinforcing the dollar's appeal as a stable asset amid uncertainty according to FXStreet.

What Are Analysts Watching Next?

The upcoming ISM Manufacturing PMI data is one of the key indicators to watch. A strong report could reinforce expectations of a healthier labor market and delay further rate cuts, while a weaker result could support a more aggressive policy easing according to FXStreet. Analysts are also monitoring the geopolitical situation in Venezuela, as any additional developments could further sway the dollar's direction according to FXStreet.

The Supreme Court's impending decision on Trump's tariffs is another critical event. A ruling against the administration's use of IEEPA could result in significant market adjustments, particularly for import-dependent companies according to Fortune. Legal experts suggest that the ruling could have broader implications for the executive branch's authority and market confidence according to Fortune.

Investors are also keeping a close eye on the Trump administration's potential replacement of the Federal Reserve chair. The nomination of a new Fed chair could signal a shift in monetary policy, with some analysts expecting a tilt toward lower interest rates according to FXStreet.

The dollar's performance in the coming weeks will depend on a combination of macroeconomic data, geopolitical developments, and central bank policy decisions according to FXStreet. For now, the market remains cautiously optimistic about the potential for further rate cuts and the dollar's continued strength in a volatile environment according to FXStreet.