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US Midterm Elections: US Dollar comes under pressure as Democrats secure early wins
Control of Congress for the final two years of US President Donald Trump’s term will be decided by the midterm elections, in which Americans cast their votes on Tuesday.
Of the 435 seats in the US House of Representatives, 201 have been called, live data from Decision Desk HQ show. Democrats have won 124 seats, compared with 77 for Republicans.
A Republican-held Senate seat in North Carolina delivered a significant victory for Democrats on Tuesday. The party also performed unexpectedly well in several Republican-leaning House districts in Florida.
Media projections showed former Democratic Governor Roy Cooper winning comfortably in North Carolina against Republican candidate Michael Whatley, who had Donald Trump’s endorsement. The result gave Democrats a Senate seat previously held by Republicans.
In Georgia, Democrat Jon Ossoff has secured a second term in the US Senate, defeating a challenge from Trump-backed Mike Collins. As Democrats try to regain control of the Senate, Georgia remains a crucial battleground.
Carol Kong, currency strategist at Commonwealth Bank of Australia, said: "Given the Democrats are favoured right now, our expectation is that they will take control of both the House and the Senate," adding: “If that pans out, the US dollar could sell off further from here, because a Democratic sweep would limit government spending over Trump's term,”
Dollar and Treasury yields fall
Ahead of the US midterm election results, the US Dollar Index (DXY) is facing some selling pressure. As of the time of writing, the DXY stands at 101.32, down 0.52% on the day. US Treasury yields have also declined across the curve: the 2-year yield fell five basis points (bps) to 4.566%, while the benchmark 10-year yield dropped six bps to 4.90%.
US Dollar Records Its Largest Fall Against the Swiss Franc Today
Today’s percentage movements in the US Dollar (USD) against the major currencies listed are set out below. Its largest decline was against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.53% | -0.43% | -0.72% | -0.33% | -0.05% | 0.10% | -0.86% | |
| EUR | 0.53% | 0.11% | -0.20% | 0.19% | 0.47% | 0.63% | -0.31% | |
| GBP | 0.43% | -0.11% | -0.30% | 0.11% | 0.38% | 0.52% | -0.44% | |
| JPY | 0.72% | 0.20% | 0.30% | 0.40% | 0.68% | 0.82% | -0.14% | |
| CAD | 0.33% | -0.19% | -0.11% | -0.40% | 0.27% | 0.42% | -0.54% | |
| AUD | 0.05% | -0.47% | -0.38% | -0.68% | -0.27% | 0.15% | -0.80% | |
| NZD | -0.10% | -0.63% | -0.52% | -0.82% | -0.42% | -0.15% | -0.95% | |
| CHF | 0.86% | 0.31% | 0.44% | 0.14% | 0.54% | 0.80% | 0.95% |
Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. For instance, choosing the US Dollar on the left and following that row across to the Japanese Yen gives the percentage change for USD (base)/JPY (quote) in the corresponding cell.
US midterm elections: key questions answered
Held at the midpoint of 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 about one-third of the Senate. In many states, voters also choose governors and other state and local officials.
Tuesday, 3 November 2026 is Election Day, in line with federal law requiring elections on the Tuesday following November’s first Monday. Many states already have early voting and postal voting under way.
Control of both chambers of Congress for the final two years of President Donald Trump’s term is decided in these elections. The party with a majority determines the legislative agenda and selects committee leaders. In the Senate, it 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 scheduled for 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 response in the US Dollar, rather than a sustained trend, is what most analysts anticipate. Markets have partly priced in a divided Congress, which is widely considered the most likely outcome. The reaction in Treasury yields may be more pronounced. Results that increase expectations of fiscal stimulus generally support both yields and the US Dollar; by contrast, political deadlock that restricts fresh spending can weigh on both. Disputes over funding or the debt ceiling may also briefly support the Dollar through safe-haven demand. Over a horizon of six to twelve months, economic growth and Federal Reserve policy are more important than the election result.
Historically, weakness in US equities ahead of midterm elections has given way to strength afterwards. Since 1950, the S&P 500 has stood higher 12 months after every midterm election: 19 out of 19, with gains averaging about 15%. Analysts attribute this pattern to the reduction in uncertainty after the results emerge. Past performance does not guarantee future returns, and some strategists note that high valuations in 2026 could test the streak.
By reducing the likelihood of far-reaching tax, spending and regulatory changes, political gridlock has often made divided government welcome in markets. With a Republican president in office, the S&P 500 has historically performed well in the years after midterms that divide control of Congress. However, funding deadlines, disputes over the debt ceiling and congressional investigations remain risks that can increase short-term volatility.
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