Dollar Falls after Democratic Sweep in U.S. Midterms
By Renae Dyer
The dollar fell to a one-month low against a basket of currencies Wednesday after the Democrats took control of the Senate and the House of Representatives in the U.S. midterm elections.
The result will likely restrict President Trump's powers for the rest of his presidential term. Potentially this could temper the president's ability to deliver further fiscal stimulus and weigh on growth, which has been a key factor behind the dollar's recent strength.
The DXY dollar index earlier fell to 101.245, its lowest level since late September. This marked a steep drop from the mid-October peak of 102.945, which was its highest since April 2025.
The dollar has gained from enthusiasm surrounding U.S. equities and the resulting capital inflows in recent months, which could now be set to wane, Commerzbank foreign exchange analyst Volkmar Baur said in a note.
"A Democratic majority could slow the rapid pace of investment in AI infrastructure and data centers," he said. "Dollar weakness could therefore become somewhat more entrenched over the coming hours."
Against the safe-haven franc, the dollar fell to an eight-week low of 0.8124 francs, according to LSEG data. The euro rose to a near three-week high of $1.1263 and sterling jumped to a seven-week high of $1.3486.
The result will make governing more difficult for Trump, although he will retain power over key areas of his agenda including foreign and trade policy.
The dollar had already been falling in recent days as polls ahead of the elections had already anticipated decent gains for the Democrats with the potential of a sweeping victory, although further losses could be limited.
"We do not expect the election result to mark a start of more persistent dollar weakness," Danske Bank analyst Kirstine Kundby-Nielsen said in a note.
The result could even have positive implications for the dollar in the longer run.
The outcome improves predictability in U.S. fiscal policy, lowers the risk of deficit-increasing policy changes over the next two years, and sets guardrails for Trump's political nominations which look positive for the dollar over the medium-term, Kundby-Nielsen said.
Write to Renae Dyer at renae.dyer@wsj.com
(END) Dow Jones Newswires
November 04, 2026 03:49 ET (08:49 GMT)
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