US Dollar Index (DXY) dives to late September lows near 101.25 on US election results
The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, comes under intense selling pressure during the Asian session on Wednesday, dropping to its lowest level since late September as early US midterm election results heightened political uncertainty.
The US Dollar Index (DXY) plummeted to late September lows near 101.25 due to the early US midterm election results. These results suggested a potential Democratic sweep, which could bring gridlock in Washington and limit government spending. This political uncertainty, combined with a Democratic sweep potentially affecting tech stocks and economic growth, fueled demand for safe-haven assets and drove US bond yields higher.
Although hawkish US Federal Reserve (Fed) expectations and persistent geopolitical uncertainties offered some support to the Greenback, aggressive bearish traders should proceed with caution. The Labor Department's monthly Job Openings and Labor Turnover Survey showed a rise in job openings, reinforcing expectations for a Fed rate hike in December.
Meanwhile, President Donald Trump reassured that the US has no immediate plans to strike Iran, despite Israeli Prime Minister Benjamin Netanyahu's hints at an attack. Also, Iran's Islamic Revolutionary Guard Corps stated that four tankers were destroyed by mines south of the Strait of Hormuz. Investors remain hopeful for a diplomatic resolution to end the US-Iran conflict.
The upcoming US economic data, including the ADP report on private-sector employment and ISM Services PMI, along with geopolitical headlines, could impact the DXY. However, the focus remains on the upcoming Nonfarm Payrolls (NFP) report due on Friday.
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