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US Midterm Results Weigh on the Dollar as Central Bank Policy Divergence Builds | 4th November, 2026

Midterms Hit the Dollar Global markets are reacting to early US midterm election results that pointed to Democratic gains, which pushed the US Dollar Index to around 101.25-101.39 while Treasury yields fell and US stock futures slid. The Pound rallied to its highest level since 16 September ahead of Thursday's Bank of England decision, the Euro rose toward 1.1250 on hawkish ECB commentary, the Yen recovered from a three-week low as intervention risks met a weaker Dollar, the New Zealand Dollar struggled despite the Dollar's slide after weak jobs data, and WTI crude stabilized near $96.00 on US-Iran peace uncertainty. Traders are now watching the final midterm results, the Bank of England decision on Thursday, Friday's US Nonfarm Payrolls report and US-Iran developments for fresh direction. NZD/USD Forecast Current Price and Context NZD/USD was trading around the 0.5580-0.5600 area in the Asian session on Wednesday, 4 November 2026, as a broad US Dollar selloff offset New Zealand's disappointing jobs report (reported level, not a live quote). New Zealand's unemployment rate rose to an 11-year high of 5.7% in Q3 against 5.5% expected and employment fell 0.1%, reinforcing the RBNZ's dovish tilt after its surprise 4-3 hold at 2.75% last week. Key Drivers • Geopolitical Risks: Hopes for US-Iran diplomacy are undermining safe-haven Dollar demand and lending the kiwi some support, although a collapse in talks or renewed US strikes could revive Dollar demand and weigh on NZD/USD. • US Economic Data: Friday's US Nonfarm Payrolls report, following this week's jump in job openings, could reshape Fed expectations and decide whether the Dollar's slide extends against the kiwi. • FOMC Outcome: The Fed's hold at 3.75%-4.00% with two dissenters favoring a hike keeps December in play, so a fresh repricing of Fed expectations could cap kiwi gains even if the Dollar softens on election results. • Trade Policy: No specific trade-policy catalyst featured in today's reporting, so changes in tariffs or China-related demand, with China's RatingDog Services PMI easing to 50.8, would influence the kiwi only indirectly. • Monetary Policy: The RBNZ's surprise 4-3 hold at 2.75% and the weak jobs data reduce pressure to resume rate rises before the 9 December meeting, which keeps the kiwi lagging currencies backed by tightening central banks. Technical Outlook • Trend: NZD/USD retains a bearish tilt after the post-RBNZ slide, and the lack of follow-through buying warrants caution for bulls despite the Dollar's selloff. • Resistance: Resistance appears around 0.5640, which buyers need to reclaim, with the 0.5700 area above as an indicative reference. • Support: Initial support is the 0.5580 post-RBNZ swing low, followed by the 0.5550 round number. • Forecast: NZD/USD could extend its rebound toward 0.5640 if the Dollar slide continues on election results, whereas a break below 0.5580 would expose 0.5550. Sentiment and Catalysts • Market Sentiment: Sentiment toward the kiwi is fragile, as soft jobs data and a dovish RBNZ outweigh the benefit of a weaker US Dollar. • Catalysts: The final US midterm results, Friday's Nonfarm Payrolls, New Zealand's general election on Saturday and the RBNZ's 9 December meeting could determine the pair's next move. GBP/USD Forecast Current Price and Context GBP/USD rallied beyond the mid-1.3400s during the Asian session on Wednesday, 4 November 2026, hitting its highest level since 16 September as a broad US Dollar selloff followed early midterm results (reported level, not a live quote). The Pound is also supported by easing UK fiscal concerns after recent budget updates and firm bets that the Bank of England will hike at its policy meeting on Thursday, with money markets pricing four hikes by September 2027. Key Drivers • Geopolitical Risks: Easing US-Iran tensions and lower oil prices have reduced safe-haven Dollar demand and favor GBP/USD, although a renewed escalation could revive Dollar strength. • US Economic Data: Friday's US Nonfarm Payrolls could revive Fed hike expectations and trigger a pullback in GBP/USD, while softer data could extend the Dollar's decline. • FOMC Outcome: The Fed's hold with two dissenters favoring a hike keeps December in play, so any rebound in Fed hike pricing could limit the Pound's rally. • Trade Policy: No specific trade-policy catalyst featured in today's reporting, so changes in UK trade arrangements or tariffs would affect GBP/USD only indirectly through growth expectations. • Monetary Policy: The widening UK-US rate gap supports GBP/USD as the BoE moves toward a hike while US yields fall, although the Pound's remaining upside may depend on guidance rather than the decision itself. Technical Outlook • Trend: GBP/USD maintains a bullish near-term bias after an intraday breakout above the 200-day SMA at 1.3424. • Resistance: Resistance appears at Monday's high just under 1.3450, followed by the 1.3500 level where the pair turned lower on 16 September. • Support: Initial support is the 200-day SMA at 1.3424, followed by the 100-day SMA near 1.3389 and the 38.2% retracement at 1.3341. • Forecast: GBP/USD could extend toward 1.3500 if the BoE signals more tightening and the Dollar stays soft, whereas a daily close back below 1.3424 would signal a corrective pullback. Sentiment and Catalysts • Market Sentiment: Sentiment toward the Pound is positive on BoE hike bets and the Dollar's slide, although the market's pricing of multiple hikes leaves limited room for upside surprises. • Catalysts: Thursday's BoE decision and guidance, Friday's US Nonfarm Payrolls, final midterm results and US-Iran headlines could determine the pair's next move. USD/JPY Forecast Current Price and Context USD/JPY slipped below 158.50 during the Asian session on Wednesday, 4 November 2026, after hitting a near three-week high the previous day (reported level, not a live quote), as intervention risks prompted JPY short-covering and the US Dollar weakened broadly on early midterm results. Energy-driven inflation risks that back further Fed tightening and uncertainty over the timing of the next BoJ hike are limiting the pair's downside, with Japan's finance minister reiterating that the joint FX statement with the US persists. Key Drivers • Geopolitical Risks: Easing US-Iran tensions and lower oil prices could reduce safe-haven Dollar demand and ease Japan's import costs, whereas renewed escalation could weigh on the Yen through higher energy prices. • US Economic Data: Friday's Nonfarm Payrolls and this week's strong job openings data could keep Treasury yields elevated and support USD/JPY, while a weak report could narrow the US-Japan yield gap and pull the pair lower. • FOMC Outcome: The Fed's hold with two dissenters favoring a hike preserves a wide policy gap with the BoJ that could keep USD/JPY supported unless December hike pricing fades. • Trade Policy: No specific trade-policy catalyst featured in today's reporting, so changes in global trade conditions would affect USD/JPY only indirectly through Japanese export expectations and risk sentiment. • Monetary Policy: Uncertainty over the timing of the next BoJ hike keeps the Yen vulnerable, while Japanese officials' repeated warnings that they are ready to act against disorderly moves could trigger sharp reversals. Technical Outlook • Trend: USD/JPY remains in a choppy consolidation within an overall uptrend, with the pair confined between 156.35 and 158.60. • Resistance: Resistance is the 158.60 barrier, and only a sustained break above it would open fresh upside potential. • Support: Initial support is 157.00, followed by the 156.35 range floor and the 155.60 area below. • Forecast: USD/JPY could stay range-bound while intervention risk and the rate gap offset each other, but a decisive close below 156.35 would shift the outlook bearish and a break above 158.60 would revive upside toward the 159.00-160.00 zone. Sentiment and Catalysts • Market Sentiment: Sentiment is divided between dip-buyers backed by the rate gap and Yen bulls relying on intervention risk, which keeps positioning cautious. • Catalysts: Friday's Nonfarm Payrolls, comments from Japanese officials, BoJ signals and final US midterm results could determine the pair's next move. EUR/USD Forecast Current Price and Context EUR/USD gained traction to near 1.1240-1.1250 in the early Asian session on Wednesday, 4 November 2026, as midterm election uncertainty weighed on the US Dollar (reported level, not a live quote). The Euro is also supported by ECB policymaker Nagel's comment that a rate hike in December is very likely to be necessary and that inflationary pressures are approaching an adverse scenario. Key Drivers • Geopolitical Risks: Progress in US-Iran peace talks could keep weighing on safe-haven Dollar demand and ease energy-driven inflation, while renewed strikes could lift oil prices and support the Dollar against the Euro. • US Economic Data: Friday's US Nonfarm Payrolls could reset Fed expectations, with a strong report likely to cap EUR/USD and a weak one likely to extend the Euro's rebound. • FOMC Outcome: The Fed's hold with two dissenters favoring a hike and elevated December hike odds could limit EUR/USD upside if the Dollar finds support after the election. • Trade Policy: No specific trade-policy catalyst featured in today's reporting, so changes in tariffs or trade restrictions affecting euro area exports would influence EUR/USD only indirectly through growth expectations. • Monetary Policy: Hawkish ECB commentary pointing to a December hike could narrow policy divergence with the Fed and support the Euro. Technical Outlook • Trend: EUR/USD keeps a bearish tone below the 100-day SMA despite its rebound toward 1.1250. • Resistance: Resistance appears in the 1.1250-1.1265 range, followed by the 1.1270 level. • Support: Initial support is the 1.1175-1.1190 area, followed by the 1.1148 and 1.1135 levels and the 1.1100 psychological mark. • Forecast: EUR/USD could test 1.1270 if the Dollar stays soft and ECB hike expectations hold, whereas a break below 1.1175 would expose 1.1135. Sentiment and Catalysts • Market Sentiment: Sentiment toward the Euro is improving on ECB hike expectations and a weaker Dollar, although the pair's position below the 100-day SMA keeps traders cautious. • Catalysts: Final midterm results, Friday's Nonfarm Payrolls, ECB commentary and US-Iran developments could determine the pair's next move. WTI Crude Oil Forecast Current Price and Context WTI crude oil extended gains for a second successive day to around $96.10 per barrel during Asian hours on Wednesday, 4 November 2026, though it remains down about 6% this week after Monday's 7.4% plunge on US-Iran peace hopes (reported level, not a live quote). Investors are weighing mediators' new peace proposals and Iran's security chief calling Washington's response unsatisfactory against the US stating it has no immediate plans to strike Iran after earlier defensive strikes, with a decline in US crude inventories also providing support. Key Drivers • Geopolitical Risks: Mixed US-Iran peace signals keep prices volatile, with a diplomatic breakthrough likely to remove more of the risk premium while renewed strikes or supply attacks could trigger a sharp rebound. • US Economic Data: US weekly inventory data and Friday's Nonfarm Payrolls could influence demand expectations, with falling crude stocks supporting prices while weak jobs data could dampen growth sentiment. • FOMC Outcome: The Fed's hawkish hold matters for WTI mainly through the Dollar, as a softer Dollar after the midterms could make crude cheaper for non-US buyers and provide support. • Trade Policy: No specific trade-policy catalyst featured in today's reporting, so tariff changes or shipping disruptions would influence crude only indirectly through global demand expectations and supply routes. • Monetary Policy: Hawkish signals from the BoE and ECB could weigh on growth expectations and crude demand, although energy-driven inflation keeps policymakers cautious. Technical Outlook • Trend: WTI retains a bullish near-term bias above its key Fibonacci supports, although neutral momentum indicators suggest the recent pullback is a consolidation rather than a reversal. • Resistance: Resistance appears around $98.00, where Tuesday's rebound reached earlier, followed by the $100.00 psychological level as an indicative reference. • Support: Initial support is the 23.6% Fibonacci level at $95.18, followed by the two-week low near $94.30. • Forecast: WTI could retest $98.00 if peace talks stall or supply attacks resume, whereas a break below $95.18 on a diplomatic breakthrough would expose $94.30. Sentiment and Catalysts • Market Sentiment: Sentiment is cautious and headline-driven, with traders reluctant to hold large positions while peace hopes and supply risks compete. • Catalysts: US-Iran negotiations, weekly US inventory data, attacks on regional supply and the Dollar's reaction to midterm results could determine WTI's next move. Wrap Up The weaker US Dollar after early midterm results, hawkish central bank signals from the BoE and ECB, and uncertainty over US-Iran peace talks are the main themes, with the Pound, Euro and Yen gaining while the kiwi and crude oil remain headline-sensitive. The final midterm results, the Bank of England decision on Thursday, Friday's US Nonfarm Payrolls, Japanese intervention comments and US-Iran developments are the principal catalysts. Traders should monitor whether the Dollar's decline extends after the election and whether key technical levels hold, remembering that every scenario in this report is conditional. Ready to trade global markets with confidence? Join Moneta Markets today and unlock 1000+ instruments, ultra-fast execution, ECN spreads from 0.0 pips, and more! Start now with Moneta Markets!

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Publication date:

2026-11-04 10:51:06 (GMT)

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