FX.co ★ Dollar Weakens After Democratic Victory

The US dollar index fell to around 101.3 on Thursday, extending the previous session’s losses as markets continued to assess the implications of Democratic gains in the US midterm elections. The clear outcome reduced a key source of political uncertainty and helped fuel a rally in global equity markets, which typically dampens demand for the greenback.

At the same time, AI-related stocks came under pressure amid concerns that Democratic control could weigh on future data-center investment. The election results also reinforced expectations of political gridlock in Washington and lowered the perceived risk that President Trump might resume military strikes against Iran. Together, these factors contributed to a sharp drop in oil prices and eroded safe-haven demand for the dollar.

Looking ahead, investors are focused on Friday’s closely watched US employment report, with current market pricing implying a 79% probability of a Federal Reserve rate hike in December.