The US Dollar Index (DXY) held steady around the 101.80 level during Asian trading on Tuesday (November 3, 2026), following a slight decline in the previous session. This movement reflects investor caution ahead of the US midterm elections, set against a backdrop of rising geopolitical tensions in the Middle East. Demand for the dollar as a safe-haven asset has provided some support, though uncertainty regarding the future direction of US economic policy continues to limit its gains.
The US midterm elections are a key focus for the market, as the outcome could influence the nation’s fiscal policy and economic stability. According to prediction markets cited in reports, the Democratic Party has an approximately 74% chance of gaining control of the Senate. Meanwhile, President Donald Trump’s administration is facing pressure from high energy prices fueled by the conflict with Iran. A shift in the composition of Congress could impact tax policy, government spending, and the outlook for US inflation.
Regarding monetary policy, the dollar remains supported by expectations of an interest rate hike by the Federal Reserve (the Fed). After keeping rates unchanged at its October meeting, the market now assigns a 73% probability to a rate increase in December. Elevated energy prices and inflationary risks are reinforcing these expectations. Such conditions could sustain the dollar’s appeal, as higher interest rates tend to boost the yields on US dollar-denominated financial assets.
Geopolitical tensions have also influenced market sentiment following reports of a limited US military strike on Iran’s Qeshm Island on Monday. These developments have heightened concerns about a potential escalation, even as both nations keep diplomatic channels open. Conversely, a decline in global oil prices—driven by hopes for a peace agreement—could help ease inflationary pressures. Investors are also awaiting US employment data, which will serve as a crucial indicator for the future direction of monetary policy. Newsmaker’s analysis suggests that the stability of the US dollar indicates that investors are still weighing various interconnected factors—ranging from political uncertainty and geopolitical risks to the outlook for interest rates. The dollar could potentially strengthen further if US economic data remains robust and expectations for Federal Reserve interest rate hikes increase. Conversely, a sustained decline in energy prices, coupled with weakening employment indicators, could alleviate inflationary pressure and limit the dollar’s appreciation in the short term.