US Dollar Price Forecast: DXY Eyes 101.180 as EUR/USD, GBP/USD Rise on Election Results

Dollar, Euro and Pound: US Election Results and Rate Decisions Dominate

The dollar weakened on Wednesday after Democrats captured both chambers of Congress in the US midterm elections, Reuters reported. Investors turned toward Treasuries as markets weighed the implications for federal spending, growth and oversight of the AI sector. Sterling also drew support from expectations for a Bank of England rate increase on Thursday.

Dollar: Election Risks Meet Steady Labor Demand

In an earlier Reuters report, Commonwealth Bank strategist Carol Kong said a Democratic sweep could constrain government spending and weaken the dollar. Other analysts have pointed to the possibility of tougher scrutiny of the artificial-intelligence sector. These are possible policy outcomes, rather than changes already enacted. The election result alone cannot settle how spending or growth will develop.

Tuesday's US labor-market report offered a steadier picture. September job openings rose by 333,000 to 7.523mn from a revised 7.190mn in August. However, the Bureau of Labor Statistics described openings as "little changed," so the numerical rise should not be treated as clear evidence of accelerating labor demand. Job openings measure unfilled positions, rather than people actually hired. The figures give the Fed more evidence to assess, but do not establish its next rate decision.

Euro: Factory Growth Holds Up as Costs Rise

October's eurozone manufacturing PMI, a survey of purchasing managers, eased to 52.7 from 52.9, Reuters reported. A reading above 50 signals improving manufacturing conditions. Operating costs rose at their fastest pace in five months. Export orders strengthened, but overall new-order growth slowed, leaving factories facing higher costs as demand growth lost some pace.

The European Central Bank held rates unchanged on October 29 and kept its approach dependent on incoming data. It said higher energy prices posed upside risks to inflation and downside risks to growth. That leaves the euro facing an awkward balance: persistent inflation could support more tightening, but higher borrowing costs and weaker demand would weigh on activity. The ECB has not committed to a fixed rate path.

Pound: Guidance Matters Beyond Thursday's Decision

The Bank of England announces its decision on November 5 . Economists expect its first rate increase since August 2023, but disagree over whether more would follow. BMO strategist Mark McCormick told Reuters on Tuesday that the prospective move looked more like a "one-and-done" hike than the start of a new cycle, meaning a single increase followed by a pause. For sterling, the guidance on subsequent decisions could matter as much as the initial announcement.