Dollar Index Hits 4-week Low

The US dollar index steadied around 101.8 on Tuesday after facing heightened volatility in the previous session, as investors turned cautious ahead of the US midterm elections. Prediction markets currently indicate a 74% probability of the Democratic Party gaining control of the US Senate, as President Donald Trump and the Republican Party face growing political pressure over elevated energy prices linked to the Iran conflict. Investors are also awaiting the closely watched US jobs report due later this week, which could provide fresh insight into labor market conditions and influence expectations for Federal Reserve monetary policy. Markets are currently pricing in roughly a 73% chance of a Fed rate hike in December, following a pause in October. Meanwhile, developments in the Middle East continued to influence currency markets, with falling oil prices amid signs of diplomatic progress between the US and Iran reducing demand for the dollar as a safe-haven asset.

The US dollar index traded lower around 101.6 at the start of November, extending its losing streak to a fourth consecutive session, following a modest 0.4% gain in October. Investors are bracing for an event-packed week, with the US midterm elections, the jobs report and interest rate decisions from central banks in the UK, Australia, Norway and Sweden in focus. The dollar also came under pressure from falling oil prices, amid growing hopes for a diplomatic resolution to the US-Iran conflict. Meanwhile, markets continue to price in another 25bps Fed rate hike in December, with the probability of such a move holding at around 75%. Last week, the Fed left interest rates unchanged, as widely expected. In contrast, the Bank of England, the Reserve Bank of Australia and Sweden's Riksbank are expected to raise interest rates this week.

DXY decreased to 101.44, the lowest since September 2026. Over the past 4 weeks, Dollar Index lost 0.69%, and in the last 12 months, it increased 1.59%.