The US dollar edged lower for a second consecutive session against major currencies on Tuesday, as market tensions eased following the US military move in Venezuela, while global equities advanced, supported by dovish remarks from Federal Reserve officials.

The euro inched up to $1.1729, while the British pound rose 0.1% to $1.3552. The dollar was also slightly weaker against the Japanese yen at 156.37 yen.

Francesco Pesole, FX strategist at ING, said: “More than 48 hours after the US military operation in Venezuela, only very limited traces remain in the currency market. The early rush into the dollar as a safe haven on Monday proved to be very short-lived.”

He added that the shock from the US arrest of Venezuelan President Nicolas Maduro over the weekend had only a brief impact across most asset classes, as global equities continued to trade near record levels.

This, in turn, had indirect implications for currency markets.

Pesole said: “The strong performance of equities yesterday, despite geopolitical risks, was — in our view — the main driver behind the reversal of the dollar’s earlier gains.”

The dollar index, which measures the US currency against a basket of six major peers, stood at 98.25 points, down 0.1%, extending its losses after snapping a four-day winning streak on Monday.

Australian and New Zealand dollars outperform

Risk-sensitive currencies such as the Australian and New Zealand dollars, which often move in tandem with equity markets, outperformed.

The Australian dollar hit its highest level in more than a year at $0.6739, while the New Zealand dollar rose 0.13% to $0.5797.

The dollar was also pressured by weak US data released on Monday, which showed manufacturing activity contracted more than expected in December, falling to its lowest level in 14 months.

Additional pressure came from dovish comments by Minneapolis Federal Reserve President Neel Kashkari, a voting member of the rate-setting committee this year. In an interview with CNBC, he said he sees risks of a sudden rise in the unemployment rate.

His remarks slightly lifted expectations for monetary easing, although federal funds futures continue to price around an 80% probability that interest rates will remain unchanged at the Federal Reserve’s next meeting on January 27–28, according to CME’s FedWatch tool.

Against the offshore-traded Chinese yuan in Hong Kong, the dollar eased marginally to 6.983 yuan.

The Swiss franc was the only major currency against which the dollar posted modest gains, rising 0.08% to 0.7922 francs.

Silver prices rose in European trading on Tuesday, extending their gains for a third consecutive session and hitting a one-week high, as the metal moved closer to trading above the $80-per-ounce level once again, supported by the current pullback in the US dollar.

Gloomy economic data from the United States, along with dovish comments from some Federal Reserve officials, have increased bets on two US interest rate cuts over the course of this year.

Price overview

• Silver prices today: Silver jumped by 3.6% to $79.39 per ounce, the highest level in a week, from an opening level of $76.61, after touching a session low at $75.91.

• At settlement on Monday, silver prices recorded a gain of 5.2%, marking their second consecutive daily increase, following the US strike in Venezuela and supported by the decline in the US dollar.

US dollar

The US dollar index fell by around 0.2% on Tuesday, extending its losses for a second straight session and moving further away from a four-week high at 98.86 points, reflecting continued weakness in the US currency against a basket of global currencies.

Beyond profit-taking pressure, the dollar retreated after gloomy US data showed a deeper contraction in the manufacturing sector in December, offering fresh evidence of slowing economic activity during the fourth quarter of last year.

These weak readings kept expectations of monetary easing by the Federal Reserve intact and confirmed that geopolitical risks alone are not sufficient to sustain further gains in the US dollar.

US interest rates

• Minneapolis Federal Reserve President Neel Kashkari, a voting member of the central bank’s rate-setting committee this year, said he sees a risk of a sharp rise in the unemployment rate.

• According to CME’s FedWatch tool, pricing for the probability of keeping US interest rates unchanged at the January 2026 meeting currently stands at 84%, while the probability of a 25-basis-point rate cut remains at 16%.

• Investors are currently pricing in two US rate cuts over the course of next year, while Federal Reserve projections point to only one additional cut of 25 basis points.

• To reassess these expectations, investors are closely monitoring the release of further US economic data, in addition to comments from Federal Reserve officials.

Gold prices rose in European trading on Tuesday, extending their gains for a third consecutive day and hitting a one-week high, supported by strong demand for the metal as a safe haven amid rising geopolitical risks following the complex US strike in Venezuela and the arrest of President Nicolas Maduro.

The advance was also underpinned by a pullback in the US dollar after the release of bleak data on US factory activity, alongside a series of dovish comments from some Federal Reserve officials.

Price overview

• Gold prices today: Gold rose by 0.6% to $4,475.79, the highest level in a week, from an opening level of $4,448.91, after touching a session low at $4,427.98.

• At settlement on Monday, the precious metal posted a gain of 2.7%, marking its second consecutive daily increase, following the US strike in Venezuela and supported by the decline in the US dollar.

The Venezuelan crisis

On Monday, detained Venezuelan president Nicolas Maduro pleaded not guilty to charges of conspiracy to traffic drugs, terrorism, and possession of automatic weapons before a federal court in New York.

Meanwhile, officials in Caracas sought to reorganize their ranks, with Vice President Delcy Rodríguez assuming the role of interim president. She stressed that Maduro remains the country’s constitutional president and pledged to resist US intervention.

International reactions ranged from Israeli support to condemnation from Russia and China, while US experts warned that the move could make the world “far more dangerous” and potentially spark a broader conflict in Latin America.

US dollar

The US dollar index fell by around 0.2% on Tuesday, extending its losses for a second straight session and moving further away from a four-week high at 98.86 points, reflecting continued weakness in the US currency against a basket of global currencies.

Beyond profit-taking pressure, the dollar retreated after gloomy US data showed a deeper contraction in the manufacturing sector in December, offering fresh evidence of slowing economic activity during the fourth quarter of last year.

These weak readings kept expectations of monetary easing by the Federal Reserve intact and confirmed that geopolitical risks alone are not sufficient to sustain further gains in the US dollar.

US interest rates

• Minneapolis Federal Reserve President Neel Kashkari, a voting member of the central bank’s rate-setting committee this year, said he sees a risk of a sharp rise in the unemployment rate.

• According to CME’s FedWatch tool, pricing for the probability of keeping US interest rates unchanged at the January 2026 meeting currently stands at 84%, while the probability of a 25-basis-point rate cut remains at 16%.

• Investors are currently pricing in two US rate cuts over the course of next year, while Federal Reserve projections point to only one additional cut of 25 basis points.

• To reassess these expectations, investors are closely monitoring the release of further US economic data, in addition to comments from Federal Reserve officials.

Gold outlook

Market strategist Ilya Spivak said that comments from Federal Reserve officials were certainly not harmful, but noted that the overall calculations have not changed significantly, adding that this week is critical with the release of the US jobs report on Friday.

Spivak added that Maduro’s arrest highlighted the rift between the United States and China and, more broadly, the ongoing trend toward de-globalization.

SPDR fund

Gold holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Monday, leaving total holdings at 1,065.13 metric tons, the lowest level since December 22.

The euro rose in European trading on Tuesday against a basket of global currencies, extending its recovery for a second consecutive day from a four-week low against the US dollar. The move was supported by continued buying from lower levels and by a pullback in the US currency following the release of bleak economic data in the United States.

Recently, expectations for the European Central Bank to cut interest rates in February have declined. To reassess these expectations, investors are closely monitoring a series of key inflation readings due this week from Germany and across the wider euro area.

Price overview

• Euro exchange rate today: The euro rose 0.15% against the dollar to $1.1738, from an opening level of $1.1722, after touching a session low at $1.1711.

• The euro ended Monday’s session up by less than 0.1% against the dollar, marking its first gain in four days, after earlier hitting a four-week low at $1.1659.

US dollar

The US dollar index fell by around 0.2% on Tuesday, extending its losses for a second straight session and moving further away from a four-week high at 98.86 points, reflecting continued weakness in the US currency against a basket of global currencies.

Beyond profit-taking pressure, the dollar retreated after disappointing US data showed a deeper contraction in the manufacturing sector in December, offering fresh evidence of slowing economic activity during the fourth quarter of last year.

These weak figures kept expectations of monetary easing by the Federal Reserve intact and confirmed that geopolitical risks alone are insufficient to sustain further gains in the US dollar.

The dollar also faced additional downside pressure following comments from Minneapolis Federal Reserve President Neel Kashkari, a voting member of the central bank’s rate-setting committee this year, who told CNBC that he sees a risk of a sharp rise in the unemployment rate.

European interest rates

• Money market pricing for the probability of a 25-basis-point interest rate cut by the European Central Bank in February currently remains below 10%.

• To reassess these expectations, investors are awaiting later today the release of Germany’s headline inflation data for December, from the euro area’s largest economy.

• On Wednesday, headline inflation data for the entire euro area for December will be released, which is expected to provide strong clues on the future path of monetary policy easing by the European Central Bank.

Interest rate differential

Following the Federal Reserve’s latest decision, the interest rate gap between Europe and the United States narrowed to 160 basis points in favor of US rates, the smallest differential since May 2022, a development that supports further upside in the euro against the US dollar.