US Dollar recovers as markets calm after Venezuela operation

Just over two days after the US military operation in Venezuela, the currency markets are showing little lasting reaction. The initial rush to the US dollar — a typical safe haven during global tensions — faded quickly.

Why? Because there are early signs of dialogue between the US government and Delcy Rodríguez, who has taken over leadership in Venezuela after Nicolás Maduro. This has made investors believe that another US military move is unlikely in the near future.

Short-term Dollar outlook: Slightly positive

Right now, the overall impact of the Venezuela situation on the US dollar looks neutral to slightly positive.

• There’s still some geopolitical risk, but it’s not big enough to threaten US interests or global oil markets.
• In the medium term, though, the dollar could weaken if markets start to believe that oil supplies will increase, pushing crude prices lower.

Equity markets and economic data influence

Stock markets performed surprisingly well yesterday, even with the geopolitical tensions. That strong performance was a major reason the dollar’s early gains faded.

Economic data also played a role. The US ISM manufacturing index fell below 48 in December, marking its fourth straight monthly drop and reaching the lowest level since October 2024.

This report shows that:

• Factory activity is shrinking, not growing.
• The backlog of orders fell to 45.8, meaning fewer new orders are coming in.
• That could lead to excess inventory and possibly job losses in the months ahead.

What’s next for the economy

These weak manufacturing numbers could set a softer tone for the ISM Services report that’s due out tomorrow.
Today’s US economic calendar is fairly quiet — it only includes the final S&P PMIs for December, which aren’t expected to move markets much.

On the Federal Reserve side, two members will speak today:

• Barkin, who usually leans hawkish (supports higher interest rates), and
• Miran, who’s considered an ultra-dove (prefers lower rates) and is a voting member of the Fed this year.

Bottom line: Dollar still facing downward pressure

Even though the dollar bounced back quickly after its brief safe-haven rally, we still think the medium-term bias is bearish — meaning the dollar could weaken a bit in the near future into 97.000 support level.

In short:

Markets have largely moved on from the Venezuela news. Stocks are steady, oil hasn’t been shaken, and economic data suggests a slowdown in US manufacturing. With no major escalation expected, investors aren’t rushing to the dollar for safety anymore.