Four-week lows retested as US midterm results pile pressure on US Dollar Index (DXY)

0.6% lower on Wednesday, the US Dollar Index extends its decline to a four-week low of 101.25.
Wednesday’s US Dollar sell-off follows a landslide election win for the Democratic Party.
Investors are shifting from equities into the safety of US government bonds amid AI regulation concerns, pushing yields and the USD lower.

The US Dollar Index (DXY) is down 0.6% on the day. Tracking the USD against six major currencies, the index faces renewed selling pressure at the 101.25 support area at the time of writing. The US Dollar (USD) ranks as Thursday’s weakest major currency following US President Donald Trump’s midterm election defeat.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Tuesday’s elections handed the Democrats control of the US Congress, including the more closely contested Senate. The Republican Party suffered a historic defeat, losing traditional strongholds such as Texas, Kansas and North Carolina, where it had governed for decades.

The election result triggered pressure on technology shares. During the Asian session, the sector suffered a further setback as investors worried that the Democrats would impose stricter AI regulation and halt most data centre construction plans. Demand for safe-haven government bonds increased. Following the results, the 10-year note’s yield fell by as much as 10 pips, putting additional downward pressure on the USD.

2027 market preview: ING assesses overnight price moves

With the Democrats not taking office until January, investors may have found some reassurance, limiting further US Dollar losses, according to ING’s Chris Turner. He nevertheless cautions that “overnight price action could provide a preview for markets in 2027,” arguing that “A Democratic Congress would be a mild dollar negative – both in terms of what it would mean for the AI story and the prospect of a prolonged US government shutdown.”

Against this backdrop, the ING Analysis Team expects US Dollar bears to remain constrained by “a still-resilient US economy and at least one more rate hike from the Federal Reserve.”

Attention therefore turns to the US ADP Employment Change and ISM Services Purchasing Managers’ Index (PMI), both due later in the day. Friday’s Nonfarm Payrolls (NFP) report remains the week’s main release. Anything short of a strong labour market report next Friday could deepen doubts over the US economic outlook and put further pressure on the USD.

Economic data focus

ADP Employment Change

Published by Automatic Data Processing Inc., the largest US payroll processor, the ADP Employment Change tracks changes in the number of people employed in the US private sector. A higher reading generally points to stronger consumer spending and supports economic growth. Markets therefore traditionally regard a high reading as bullish for the US Dollar (USD) and a low reading as bearish.

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Forthcoming release: Wed 4 Nov 2026 13:15

Release frequency: Monthly

Market consensus: 69K

Prior reading: 90K

Data source: ADP Research Institute

Employment Data: Why Traders Watch

Nonfarm Payrolls is usually released two days after the ADP report. Traders often use employment data from ADP, America’s largest payrolls provider, as an early signal of the Bureau of Labor Statistics release, given the correlation between the two series. Although the series track each other closely overall, individual months can show substantial differences. FX traders also monitor ADP for the same reason they follow NFP: persistently strong employment growth adds to inflationary pressures, increasing the likelihood of a Fed interest rate rise. Results above consensus tend to support the USD.

Economic Data Indicator

50 Threshold: ISM Services PMI

Readings above 50 signal broad expansion in the services economy. This is positive for the US Dollar (USD), while readings below 50 indicate generally declining services activity and are viewed as negative for USD. Published monthly by the Institute for Supply Management (ISM), the Services Purchasing Managers Index (PMI) is a leading gauge of business activity in the US services sector, which accounts for most of the economy. The index draws on a nationwide survey of supply executives, using information gathered within their respective organisations. Responses indicate whether conditions have changed in the current month relative to the previous month.

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Next scheduled release: Wed 4 November 2026 15:00

Release frequency: Monthly

Market consensus: 54.8

Previous reading: 54.9

Data source: Institute for Supply Management

ISM Services PMI: Significance for traders

A reading above 50 signals expansion in US service-sector economic activity. The Services Purchasing Managers Index (PMI), published by the Institute for Supply Management (ISM), gauges current conditions in a sector that has historically accounted for a large share of US GDP. When readings exceed expectations, the USD typically strengthens against other currencies. Investors also scrutinise the Employment Index and Prices Paid Index alongside the headline PMI for insights into labour market conditions and inflation.