Democrats Win Congress: How the US Midterm Results Hit the Dollar and Treasury Yields

Democrats won control of both chambers of the US Congress in Tuesday’s midterm elections, and the US dollar weakened as the results came in. The US Dollar Index fell about 0.5% to near 101.3 on Wednesday 4 November, according to Babypips. By Thursday it was at its lowest level since late September, according to Central FX. Lower Treasury yields were one of the main drivers.

Published 5 November 2026. Market figures were reported on 4 and 5 November and move quickly, so check live prices before you trade. News and analysis for education only, not trading advice.

What Happened in the US Midterm Elections

Voters went to the polls on Tuesday 3 November 2026. CBS News projected that Democrats had taken the Senate shortly after 11:30 pm ET and reported at least 54 Senate seats for the party. CNBC reported Democratic gains from Republicans in Iowa, Kansas, North Carolina, Ohio, South Carolina, Maine and Texas.

The House count was still being finalised on Thursday. Babypips, citing NBC News and Associated Press data, showed Democrats ahead 236 to 146 with 53 races uncalled when it published, while other outlets used different estimates. Because the count is still moving, we do not quote a final House total. President Trump remains in office, and CBS reported that the new Congress takes control next year, so Washington is heading toward divided government.

We covered the setup before the vote in our US midterms and the dollar preview.

How the Dollar, Yields and Gold Reacted

Market	Reported move	Source
US Dollar Index	Down about 0.5% to roughly 101.32 on 4 November; lowest since late September by 5 November	Babypips, Central FX
US 10-year yield	Down more than 6 basis points to about 4.88%	CNBC
US 2-year yield	Down more than 4 basis points to about 4.57%	CNBC
EUR/USD	About 1.1245 on Thursday morning; traders watching 1.1270 to 1.1280	Central FX
GBP/USD	About 1.3474, holding above 1.3400	Central FX
Gold (XAU/USD)	Up nearly 3% to above $4,000 after a daily low of $3,919	FXStreet

Oil prices also dropped on Wednesday, according to the same CNBC report on Treasury yields. Gold’s rebound is the subject of our companion analysis, Gold Rebounds Above $4,000.

Why Did the Dollar Fall?

Central FX’s market update quoted Danske Bank pointing to lower yields as a key driver, and said investors were reassessing the outlook for US growth, spending and fiscal policy. It also said the market looked comfortable selling dollar rallies rather than rebuilding long positions.

Our analysis. A split Washington can reduce the odds of large new fiscal measures, and those measures tend to push yields higher. A similar reaction followed the 2018 midterms, when Reuters reported the dollar fell about 0.6% and Treasury yields dropped as further tax cuts looked less likely. The comparison is useful but imperfect, because today’s backdrop includes energy-driven inflation and an active debate about Fed rate hikes.

The Fed Is Still Half the Story

The election changes the fiscal debate, not monetary policy. The Federal Reserve held its target range at 3.75% to 4.00% on 28 October by a 10 to 2 vote. Lisa Cook and Beth Hammack dissented in favour of a quarter-point hike, and the statement said inflation remains elevated. The next meeting is on 9 December, according to the Fed’s calendar.

Markets still lean toward a hike. Reports on 4 and 5 November put the probability of a December increase at roughly 79% to 83% on the CME FedWatch tool, depending on timing, according to FXStreet and Mitrade.

Our analysis. That is why the dollar’s fall is not a one-way story. Politics pulled yields lower on Wednesday, but a strong jobs report could lift December hike pricing again and rebuild support for the dollar. If the move was mostly a one-day repricing of fiscal expectations, it can fade quickly. This is a scenario, not a forecast.

What It Means for EUR/USD and GBP/USD

• Euro. EUR/USD is the most direct expression of dollar weakness. BNY and UOB, quoted by Central FX, see a positive bias for the euro, with UOB focused on a hold above roughly 1.1280, even though German factory orders disappointed on Thursday.
• Pound. Sterling is firm but has its own event risk. The Bank of England announces its decision at 12:00 GMT on 5 November. A Reuters poll cited by BigGo Finance expected a 7 to 2 vote for a quarter-point hike to 4%, and investingLive said the vote split and guidance would matter more than the hike itself. We wrote this before the decision, so check the result. Our BoE preview covers the scenarios.

What Forex Traders Should Watch Next

• Bank of England decision, 12:00 GMT on Thursday 5 November.
• US initial jobless claims, 13:30 GMT on Thursday, with a consensus of 196,000 according to Central FX, plus Fed speakers.
• US nonfarm payrolls, Friday 6 November at 8:30 am ET (13:30 GMT, 19:15 in Nepal), from the Bureau of Labor Statistics. See our October jobs report preview and how to trade NFP.
• The final House count and any races still being tallied.
• The 10-year Treasury yield near 4.9% and the Dollar Index near 101, the levels cited in this week’s reports.
• The 9 December FOMC meeting and how December hike pricing changes before it.

Check release times in your own time zone on the HamroForex Economic Calendar.

Trading Around Event Risk

Spreads can widen and prices can gap around central bank decisions and payroll releases. If you cannot accept slippage, reduce size or stand aside, and calculate position size before you enter using the Risk Management Calculator or our guide to calculating lot size. Long EUR/USD and long GBP/USD both lean on the same dollar view, so check currency correlation before stacking them.

What Is Confirmed and What Is Not

• Confirmed: the Democratic wins reported by CBS News and others, the market moves cited above, and the Fed’s 28 October decision.
• Expectations: a Bank of England hike on 5 November and a December Fed hike, both based on market pricing and polls, not decisions.
• Analysis: our reading of why the dollar fell and what could reverse it.

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