Breaking: Early midterm results signal Democratic gains as US Dollar drops below 101.50

Selling drives the US Dollar Index sharply lower towards 101.25 in early Asian trading on Wednesday.
Control of Congress for the final two years of Trump’s term will be decided by the midterm elections in which Americans voted on Tuesday.

Selling pressure weighs on the US Dollar Index (DXY), which trades near 101.25 in Wednesday’s early Asian session. For fresh direction, traders will watch the US midterm election results closely later in the day.

With polls already closed in some of the early states, Americans are casting their midterm votes in an election that will pass judgement on President Donald Trump's second term.

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Democrats have secured 42 seats and Republicans 18, according to live figures from The Associated Press (AP). Results have been declared for 60 of the 435 seats in the US House of Representatives.

In Georgia, Democrat Jon Ossoff has secured a second term in the US Senate, defeating a challenge from Trump-backed Mike Collins. Holding the state is crucial to the Democrats’ efforts to regain control of the Senate.

US midterm elections: What should you know?

What do voters elect in the US midterms?

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 roughly one-third of the Senate. In many states, voters also choose governors and other state and local officials.

On which date will the 2026 midterms take place?

Tuesday, 3 November 2026, is Election Day, in keeping with federal law requiring it to fall on the Tuesday following November's first Monday. Many states already have early and postal voting under way.

What is at stake in the US midterm elections?

Control of both chambers of Congress during the final two years of President Donald Trump's term rests on 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.

Will voters choose a president in the 2026 midterms?

No presidential vote takes place in the midterms: presidents are elected every four years, with the next election 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.

What could the 2026 midterms mean for the US dollar?

A limited, temporary response in the US Dollar, rather than a sustained trend, is what most analysts anticipate. Markets already partly price in a divided Congress, widely regarded as the base case. The results may have a more pronounced effect on Treasury yields. When an outcome increases expectations of fiscal stimulus, yields and the US Dollar tend to rise; when legislative gridlock constrains fresh spending, both can decline. Disputes over funding or the debt ceiling can also briefly support safe-haven demand for the Dollar. Across a six- to twelve-month horizon, however, growth and Federal Reserve policy carry more weight than the election.

What has been the pattern for stocks before and after midterms?

Weakness ahead of midterms followed by strength afterwards has been the historical pattern for US equities. Looking back to 1950, the S&P 500 has risen over the 12 months following every midterm election: 19 out of 19, with gains averaging about 15%. Analysts attribute this pattern to the easing 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 this record.

Why might markets favour a divided Congress?

With gridlock reducing the likelihood of far-reaching changes to taxation, spending and regulation, markets have frequently responded favourably to divided government. During Republican presidencies, the S&P 500 has historically performed well in the years after midterms that left Congress under split control. Funding deadlines, disputes over the debt ceiling and congressional investigations remain risks that can fuel near-term volatility.