Forex Today: Dollar shows no strength on US midterm election day

3 November, Tuesday: the key market developments to watch.

The United States (US) midterm elections remain the focus for financial markets, keeping sentiment cautious early Tuesday. September Factory Orders and JOLTS Job Openings figures from the US are due in the second half of the day.

Modest selling pressure marked the start of the week for the US Dollar (USD). During Monday’s European session, the USD Index reached a one-month low near 101.40. It subsequently pared its decline after the Institute for Supply Management (ISM) released stronger-than-expected Manufacturing Purchasing Managers’ Index (PMI) figures. Losses across Wall Street’s main indices provided further support, allowing the index to recover much of its daily decline and finish only marginally lower. In early Tuesday trading, the USD Index holds within a narrow band above 101.70. US stock index futures, meanwhile, are down between 0.1% and 0.5%.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

US Dollar performance this week

This week’s percentage moves in the US Dollar (USD) against the major currencies listed are set out below. Its weakest performance was against the Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.27%	-0.14%	0.24%	0.02%	0.72%	0.11%	-0.67%
EUR	0.27%		0.11%	0.46%	0.27%	0.91%	0.35%	-0.42%
GBP	0.14%	-0.11%		0.19%	0.18%	0.81%	0.23%	-0.53%
JPY	-0.24%	-0.46%	-0.19%		-0.17%	0.49%	-0.19%	-0.98%
CAD	-0.02%	-0.27%	-0.18%	0.17%		0.68%	-0.02%	-0.70%
AUD	-0.72%	-0.91%	-0.81%	-0.49%	-0.68%		-0.55%	-1.32%
NZD	-0.11%	-0.35%	-0.23%	0.19%	0.02%	0.55%		-0.83%
CHF	0.67%	0.42%	0.53%	0.98%	0.70%	1.32%	0.83%

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).

US midterms: Dollar outlook hinges on control of Congress

With the US midterm elections set for today, Commerzbank’s Norman Liebke says they “are taking place today,” and that initial results are “likely to start coming in shortly after midnight CET”. Results in “particularly closely contested states may not become clear until several days after the election.” Citing the latest polls, he adds that “the Republicans appear headed for a significant defeat and could lose not only their majority in the House of Representatives but also control of the Senate.”

The eventual composition of Congress will determine the Dollar’s response, in Liebke’s view. He writes: “If only the House of Representatives changes hands, the Dollar would likely face some headwinds as well, albeit to a lesser extent,” but adds that “if the Republicans retain control of both chambers, this should instead provide support for the Dollar.”

A 25 basis point (bps) policy rate increase was announced by the Reserve Bank of Australia (RBA) during Asian trading, taking the rate from 4.6% to 4.85%. "With revised inflation outlook and ongoing upside risks, board decides further tightening of financial conditions is necessary to support inflation return to target," the central bank said in its policy statement. Speaking at the subsequent press conference, RBA Governor Michele Bullock suggested that pausing to assess incoming data would probably be the best course now. Monday’s decline of nearly 0.5% in AUD/USD has been followed by continued pressure early Tuesday, with the pair trading below 0.7000 at a two-week low.

Crude Oil fell sharply on Monday as optimism grew over a diplomatic resolution between the US and Iran. US Vice President JD Vance said Washington had made “progress” in indirect peace talks. Early Tuesday, however, prices rose after reports of US military strikes on Iranian targets in the Strait of Hormuz. The strikes followed surface-to-air missile threats against US assets, signalling a possible escalation in the conflict.

EUR/USD advanced towards 1.1250 as buying momentum strengthened during Monday’s European session, then surrendered much of that gain in US trading. The pair is rangebound below 1.1200 early Tuesday, ahead of scheduled speeches from several European Central Bank (ECB) policymakers later in the day.

GBP/USD is consolidating around 1.3400 after Monday delivered its fourth successive daily gain.

USD/JPY is fluctuating within a tight range below 158.00, following an advance of about 0.2% on Monday.

NZD/USD finished Monday lower despite broad-based USD weakness. A corrective rise early Tuesday has brought the pair to around 0.5630. Attention will turn to New Zealand’s third-quarter employment figures, due in the opening hours of Wednesday’s Asian session.

After falling sharply towards the end of last week, Gold (XAU/USD) recovered nearly 2% on Monday. That rebound is proving difficult to sustain early Tuesday: XAU/USD is retreating towards $3,900 and is already down about 1% for the day.

US midterm elections: key questions answered

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 all 435 House of Representatives seats and about one-third of Senate seats are contested. In many states, voters also elect governors and other state and local officials.

3 November 2026: when does midterm voting take place?

Tuesday, 3 November 2026 is Election Day. Under federal law, voting takes place 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 for the final two years of President Donald Trump’s term will be determined by the vote. Each chamber’s majority party determines the legislative agenda and selects committee leaders. The Senate majority also controls the confirmation of judges and senior officials.

2026 midterms: will voters choose a president?

No presidential vote takes place in the midterms. Presidents are elected at four-year intervals, with the next election due in November 2028. Midterms are widely regarded as a verdict on the incumbent president’s party, which has historically tended to lose seats in the House.

2026 midterms: what could drive the US Dollar’s response?

A limited, temporary move rather than a sustained US Dollar trend is the expectation among most analysts. Markets broadly regard a divided Congress as the base case and have already priced it in to some extent. The response in Treasury yields may be more pronounced. Results that increase the prospect of fiscal stimulus typically push yields and the US Dollar higher; legislative deadlock that restrains fresh spending can weigh on both. Funding disputes or debt-ceiling confrontations can also generate brief safe-haven support for the Dollar. Across six to twelve months, however, growth and Federal Reserve policy carry more weight than the election outcome.

19 out of 19: what is stocks’ post-midterm record?

Historically, US equities have struggled ahead of midterms and strengthened afterwards. In all 19 out of 19 midterm elections since 1950, the S&P 500 was higher 12 months later, with gains averaging about 15%. Analysts attribute this pattern to the reduction in uncertainty once election results emerge. Past performance does not guarantee future returns, and some strategists note that high valuations in 2026 could test the streak.

Divided Congress: market support or political risk?

Investors have often responded favourably to divided government, as legislative deadlock reduces the likelihood of major tax, spending and regulatory changes. With a Republican president in office, the S&P 500 has historically performed well in the years after midterm elections that divided control of Congress. Funding deadlines, debt-ceiling disputes and congressional investigations remain risks that can increase short-term volatility.