WASHINGTON, Jan. 15, 2026 — The U.S. dollar rebounded in Asian trading on Wednesday after U.S. inflation data came in close to expectations, helping calm markets that had been unsettled by political scrutiny of the Federal Reserve. Investors reassessed positions after days of volatility tied to comments directed at Fed Chair Jerome Powell, while the latest consumer price data shifted attention back to economic fundamentals.

The dollar index climbed toward a one-month high, recovering losses seen earlier in the week. Currency markets reacted to signs that inflation continued to cool at a measured pace, easing fears of abrupt changes in U.S. monetary policy and supporting demand for the greenback.

Inflation Data and Market Reaction

The Labor Department reported that consumer prices rose 0.3 percent in December from the previous month, broadly aligning with forecasts. Core inflation, which excludes food and energy, also reflected expectations, reinforcing views that inflation trends remained contained.

Markets responded by trimming earlier bets against the dollar, which had weakened after political rhetoric raised questions about policy continuity. With inflation data offering few surprises, traders shifted focus to rate expectations and near-term policy stability, lifting the U.S. currency against major peers.

Federal Reserve and Political Context

Debate over the Federal Reserve intensified earlier in the week after Republican lawmakers raised the prospect of legal action against Powell. Those remarks unsettled investors and briefly weighed on the dollar, as markets weighed the risk of political interference in monetary policy.

Political Scrutiny and Market Sensitivity: Currency and bond markets reacted swiftly to the comments, reflecting sensitivity to any signal that could alter the Fed’s independence. Analysts said the episode underscored how political developments can unsettle markets even in the absence of changes to economic data.

The release of inflation figures helped redirect attention toward measurable indicators, reducing uncertainty that had built around policy leadership. That shift supported a rebound in the dollar as investors recalibrated risk.

Bankers and Economists Weigh In: Senior economists and former central bank officials publicly emphasized the importance of preserving central bank autonomy. Their remarks helped reinforce expectations that monetary policy decisions would remain guided by data rather than political influence.

Investors took those statements as reassurance, allowing markets to absorb earlier noise and focus on inflation trends and interest rate outlooks. That dynamic contributed to improved sentiment across currency markets.

Market Pricing and Rate Expectations

Interest rate futures continued to indicate a strong probability that the Federal Reserve will leave rates unchanged at its January meeting. Traders interpreted the inflation report as consistent with a pause in policy moves, reducing speculation around near-term adjustments.

With few major economic releases scheduled before the meeting, markets showed signs of consolidation. Investors balanced caution with the view that policy settings were likely to remain unchanged in the short term.

Currency and Asset Movements

The dollar’s rebound weighed on several major currencies. The Japanese yen weakened toward multi-month lows, as domestic uncertainty and global rate differentials supported demand for the U.S. currency.

Equity markets showed mixed reactions. U.S. stock futures edged higher, while Treasury yields moved modestly as bond investors adjusted positions based on stable rate expectations. Cryptocurrencies also posted gains, reflecting allocation shifts as traders navigated cross-market signals.

Investor Takeaways

Analysts said the inflation data supported expectations of gradual disinflation without forcing policy recalibration. At the same time, markets remain attentive to political developments that could influence sentiment or trigger volatility.

For now, the dollar’s recovery reflects renewed focus on economic data and reassurance around monetary policy continuity. With the Federal Reserve meeting approaching, investors are likely to remain attentive to both inflation trends and public commentary surrounding the central bank.