By Naveen Athrappully

The U.S. dollar slightly strengthened in early morning trade on Jan. 5, following the United States’ arrest of Venezuelan leader Nicolás Maduro, with investors closely watching key economic data scheduled to be released this week.

The U.S. dollar index was up 0.41 percent at the 98.82 level as of 8:31 a.m. EST on Jan. 5. Since Dec. 30, the currency has registered gains every single day. The dollar strengthened against the euro but fell against the British pound and the Japanese yen earlier in the day. It later recovered to register gains against the currencies.

Investors are now waiting for the release of various economic data. Key among them is the Employment Situation report, set to be published by the Bureau of Labor Statistics on Jan. 10.

Other critical economic data include the ISM Manufacturing PMI report due on Jan. 5, the ADP employment change report on Jan. 7, and export/import data and jobless claims reports on Jan. 8.

The impact of Maduro’s arrest will add a new geopolitical angle to track for investors.

U.S. forces arrested Maduro in Venezuela early morning on Jan. 3, exiting the country’s airspace less than five hours after President Donald Trump issued an order to capture him.

Maduro has long been on the U.S. government’s wanted list. In March 2020, he was indicted in New York, together with other Venezuelan officials, for allegedly heading a narcotics trafficking organization with ties to groups designated as terrorists by the United States.

On Jan. 4, Trump said a second strike in Venezuela is possible if its leaders “do not behave.” Trump also warned that Mexico and Colombia could see U.S. military action targeting drug traffickers.

In a Jan. 5 report, ING Bank said the initial market response to the United States’ Venezuela operation has been a “modest flight to quality,” including some support for the U.S. dollar.

“In terms of the short-term market implications, investors will be wary of further U.S. military intervention in Venezuela if the new administration does not bend to policy directives coming from Washington,” ING said.

“Given the uncertainty about how the next few days will pan out, investors will probably prefer the liquidity of the dollar. Latin currencies of left-leaning governments in the Western hemisphere may also come under pressure today—especially the Colombian peso, but also the Mexican peso, given its relative liquidity and its use for proxy Latam risk.”

The U.S. dollar index, a measure of the currency against a basket of currencies, has been on a decline since roughly the beginning of 2025. On Jan. 13, 2025, the index hit a high of around 110 and is currently hovering around the 98 level.

In a Nov. 26 report, Morgan Stanley predicted that the U.S. dollar would be on a “choppy path” over the next 12 months, with continued weakening in the initial months and a recovery later on.

The U.S. dollar index is projected to “fall from its current level of around 100 to 94 in the second quarter of 2026, the lowest since 2021,” it said.

“A rebound would bring the index back to 100 by the end of next year, with potential for further gains in 2027.”

Morgan Stanley identified three factors that could boost the dollar in the second half of 2026: a resilient U.S. growth outlook, a rebound in U.S. interest rates, and increased corporate and investor confidence in the dollar that would drive down their hedges against the currency’s depreciation.

Meanwhile, the U.S. operation in Venezuela could be impactful on oil prices. Trump has announced plans to rebuild the oil industry of Venezuela, which is estimated to have roughly 303 billion barrels of proven crude reserves, the largest such reserves in the world.

“We’re going to have our very large United States oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country,” the president said in a Jan. 3 news conference.

At its peak in the 1970s, Venezuela used to produce 3.5 million barrels per day of oil, which fell to an average of roughly 1.1 million barrels per day in 2025.

Brent crude oil futures were trading up by 0.51 percent in early morning trade on Monday, exceeding the $61 per barrel level.