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Breaking: Early midterm results signal Democratic gains as US Dollar slips below 101.50
- US Dollar Index drops sharply towards 101.25 as early Asian trading gets under way on Wednesday.
- Control of Congress for the final two years of Trump’s term is at stake in the midterm elections, in which Americans voted on Tuesday.
At around 101.25, the US Dollar Index (DXY) is under some selling pressure in Wednesday’s early Asian trading. For fresh direction, traders will be watching the US midterm election results closely later in the day.
With polls already closed in some of the first states to vote, Americans are casting ballots in midterm elections that will pass judgement on President Donald Trump’s second term.
Live figures from The Associated Press (AP) show that 60 of the 435 seats in the US House of Representatives have been called. Democrats have taken 42 seats, while Republicans have secured 18.
In Georgia’s US Senate contest, Democrat Jon Ossoff has secured a second term by defeating Trump-backed challenger Mike Collins. Holding the state is crucial to the Democrats’ efforts to regain control of the Senate.
US midterm elections: key facts and market implications
Held midway through a president’s four-year term, the US midterms are federal elections in which voters elect all 435 members of the House of Representatives and roughly one-third of the Senate. Many states also elect governors and other state and local officials.
Tuesday, 3 November 2026 is Election Day, in line with federal law requiring elections to fall on the Tuesday following November’s first Monday. In many states, early and postal voting are already under way.
Control of both chambers of Congress for the final two years of President Donald Trump’s term will be determined by these elections. Setting the legislative agenda and selecting committee leaders fall to the majority party. In the Senate, that party also controls the confirmation of judges and senior officials.
The president is not on the ballot: presidential elections take place every four years, with the next due in November 2028. Often regarded as a referendum on the incumbent president’s party, midterms have historically tended to cost that party seats in the House.
A limited, temporary move in the US dollar, rather than a sustained trend, is what most analysts anticipate. Markets widely regard a divided Congress as the central scenario and have already partly priced it in, although Treasury yields may show a more pronounced response to the outcome. Results that strengthen expectations for fiscal stimulus generally push yields and the US dollar higher; by contrast, a legislative impasse that restrains fresh spending can weigh on both. Disputes over funding or the debt ceiling can also briefly support the dollar’s safe-haven appeal. Over six to twelve months, however, economic growth and Federal Reserve policy carry more weight than the election result.
Historically, US equities have tended to struggle ahead of midterms before strengthening afterwards. In all 19 out of 19 midterm elections since 1950, the S&P 500 has stood higher 12 months later, delivering an average gain of about 15%. Analysts attribute this pattern to the retreat of uncertainty after the results become clear. Past performance does not guarantee future returns, and some strategists caution that elevated valuations in 2026 could challenge that run.
Because legislative gridlock reduces the likelihood of far-reaching changes to taxation, spending and regulation, markets have frequently responded positively to divided government. Historically, with a Republican president in office, the S&P 500 has performed well in the years after midterms that left Congress under split control. Funding deadlines, disputes over the debt ceiling and congressional investigations nevertheless pose risks that can increase short-term volatility.
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