Dollar Index falls to 101.10 as yields drop to 4.92%

The US Dollar Index (DXY) touched 101.10 on November 4, marking a five-week low after Democrats swept Congress in the US Midterms. The decline represented a drop of roughly 1.7% from October’s 18-month peak of 102.87, driven by falling Treasury yields and uncertainty over Washington’s economic policies.

Political Gridlock and Yield Compression

Investors moved away from the currency as the 10-year Treasury yield dropped from around 5.3% in early October to 4.92% on November 4. Lower yields reduce the appeal of dollar-denominated investments, weakening demand for the currency. This shift coincided with expectations that a Democratic-controlled Congress could restrict President Trump’s spending plans. Smaller fiscal stimulus expectations may reduce government borrowing, further easing pressure on Treasury yields.

Invesco strategist David Chao noted that Democratic control of Congress will make it harder for the White House administration to pass major partisan legislation. Additionally, investors expressed concern that a Democratic Congress could tighten oversight of artificial intelligence, an industry driving significant US investment. This prospect has already rattled technology stocks, contributing to broader market volatility.

Jobs Data and Technical Outlook

Despite the post-election selloff, the US added 165,000 jobs in October, substantially beating expectations. This strong labor market data strengthened bets on another Federal Reserve rate hike in December, helping the dollar recover to 102.28 on November 6. The rebound suggests the recent selloff is far from settled, with the currency remaining about 4% higher in 2026.

Technical charts identify two possible paths for the DXY. A bullish scenario requires the index to hold above the 100.90–101.15 support zone, which could support another move toward 102.87–103. Conversely, a bearish scenario involves a sustained break below 100.90, which could expose the index to the 100.20–100.60 range, followed by the 99 area. The weekly chart shows a rising wedge, suggesting the broader uptrend remains vulnerable, while the daily chart highlights the importance of the 101 support area.

For crypto assets, dollar weakness and declining yields generally favor risk assets like Bitcoin. However, Bitcoin lost more than 5% during the recent AI-driven market selloff, illustrating that crypto can still fall when investors become concerned about the broader economy. The next inflation report and Federal Reserve signals will likely determine which technical scenario develops, with analysts expecting US Q2 growth at 2.1% while the Atlanta Fed’s GDPNow model points to just 1.6%.