The US dollar (USD) is no longer affected by the events of the Venezuelan conflict that are gradually subsiding and the market's attention is now more focused on economic data to be published this week.
However, the market still remains optimistic in the short term as 'risk-on' sentiment has emerged and revived confidence in the currency market trend.
At 9.40 am, the US Dollar Index (DXY) was at 98.543 points, down 0.05% since it opened in early trading on Wednesday in the Asian session.
More than 48 hours after the US military operation in Venezuela, the currency market has increasingly forgotten the incident.
The surge in demand for the USD as a safe asset early Monday was only temporary. Initial signals of dialogue between the US and Maduro's successor, Delcy RodrÃguez, reduced the possibility of follow-up military action in the near future.
Initial assessment sees the impact of the attack on Venezuela on the dollar as neutral in the short term as geopolitical risks are unlikely to have a major impact on the US and the oil market.
In the medium term, downward pressure could arise if the market starts to believe that oil supplies are increasing and oil prices are falling.
Yesterday's strong performance in stocks, despite geopolitical risks, was the main reason for the reversal of the USD's previous gains.
Economic data also contributed. The US ISM manufacturing index fell below 48 in December, the fourth consecutive month of decline and the lowest since October 2024.
Backorders also narrowed to 45.8, signaling the risk of overstocking and a possible negative impact on employment in the coming months.
The data could set a soft tone ahead of the ISM services index tonight (Wednesday).
For now, the market's attention will be entirely on the conflict that the US has just sparked over Greenland.
