Dollar Hits Two-Week High as Markets Brace for 'Quarantine' Enforcement in Venezuela

WASHINGTON/CARACAS — The U.S. dollar rallied to a two-week high on Monday as global markets priced in the rising probability that the U.S. intervention in Venezuela will evolve from a targeted extraction into a prolonged military engagement. Following the weekend operation that removed Nicolás Maduro, the focus has shifted to the enforcement of the Trump administration's newly announced "oil quarantine" against the entrenched regime of Delcy Rodríguez.

The Dollar Spot Index rose 0.3% as traders initiated a "flight to safety," reacting to the deepening constitutional crisis in Caracas. While the special operation to extract Maduro concluded by January 4, the security environment remains highly kinetic. The Venezuelan Supreme Tribunal of Justice’s move to swear in Vice President Rodríguez, coupled with Defense Minister Vladimir Padrino López’s pledge of military loyalty to her, has created a standoff that directly challenges President Trump’s declaration of a transition.

Secretary of State Marco Rubio’s Sunday announcement of a strict "oil quarantine" serves as the primary flashpoint for near-term escalation. Analysts warn that enforcing such a blockade against a hostile military apparatus moves the U.S. past special operations and into conventional interdiction. To prevent the movement of Venezuelan crude, U.S. forces may be required to utilize aerial bombardment, drone strikes, or missile targeting of logistics hubs.

This enforcement phase is the critical variable for investors. If the U.S. initiates kinetic strikes to uphold the quarantine this week, it significantly increases the probability of the Trump Administration submitting a 48-hour report consistent with the War Powers Resolution before the end of the month—a legislative trigger that markets view as a signal of long-term entrenchment.

"The extraction was the opening salvo, not the conclusion," noted one geopolitical risk analyst. "The market is now pricing in the friction between the U.S. blockade and the Rodríguez succession. The potential for new strikes to dismantle command and control structures in the coming days is high."

President Trump’s recent rhetoric warning neighboring nations—specifically Colombia and Mexico—against interfering has further widened the scope of geopolitical risk, driving investors away from the euro and peso. While some strategists at Oversea-Chinese Banking Corp suggest the situation could see a "relatively quick closure," the immediate uncertainty regarding the rules of engagement is keeping volatility high.

Investors are now watching two concurrent timelines: the release of U.S. inflation and payroll data later this week, and operational reports from the Caribbean command, where the definition of a "strike" could determine the next phase of U.S. legislative and military involvement.