The US dollar index held near 101.8 on Tuesday, stabilizing after sharp swings in the previous session as investors turned cautious ahead of the US midterm elections. Prediction markets currently assign a 74% probability that the Democratic Party will gain control of the US Senate, as President Donald Trump and the Republican Party face mounting political pressure over elevated energy prices tied to the Iran conflict.
Markets are also looking ahead to the closely watched US jobs report due later this week, which could offer fresh insight into labor market conditions and help shape expectations for Federal Reserve policy. Futures pricing suggests roughly a 73% chance of a Fed rate hike in December, following a pause in October.
At the same time, developments in the Middle East continued to sway currency markets. Declining oil prices, amid signs of diplomatic progress between the US and Iran, have reduced demand for the dollar as a safe-haven asset.
