For a week, the dollar looked strong. Then voters spoke. The US Dollar Index fell 0.3% to 101.4 on 4 November as Democrats made big gains in the midterms, Reuters reported on Yahoo Finance . Traders sold the dollar and bought bonds. If you trade gold, oil or any dollar pair, this move touches you. Here is what happened, and what comes next. The chart below shows how far the index fell.
Figure 1: US Dollar Index key levels in dollar green and black, 3 to 5 November 2026.
Reading the Chart
On the left, the index sat near 102.00 on 3 November. That is the top dashed line. It is our resistance. Then it fell to 101.40 on 4 November. It hit a low of 101.245. Now it trades near 101.26. In plain words, the index lost about three-quarters of a point in two days, then went flat. Buyers have not stepped in yet. Think of 101.00 as the floor for now. The dotted lines are forecasts: 101.59 for the fourth quarter and 100.18 in twelve months. Even forecasters expect a slow drift down, not a crash. The green band is the next support zone, between 101.00 and 100.18. Our USD/MXN forecast shows how the peso reacted to the vote.
What Moved the Dollar
Politics did most of the work. That matters for every trader who holds dollar assets. Democratic gains raised hopes of gridlock in Washington. That cut demand for the dollar as a safe haven, says Trading Economics . Oil fell too, as fears of new strikes on Iran faded. But the Fed still matters. Markets give a 79% chance of a December hike. That was 77% a day earlier and 84% a week ago, so the odds have eased a little. Our gold forecast ahead of US payrolls covers this tug of war.
Levels and Data
The index tracks the dollar against six currencies. The euro has the biggest weight. So, EUR/USD moves matter most. On Friday, the Bureau of Labor Statistics will release the jobs report. Strong jobs would lift hike bets and the dollar. Weak jobs would do the opposite. Hike talk has driven the dollar for weeks, as our gold price update shows. A close below 101.00 would open 100.18. A bounce above 101.59 would turn the focus back to 102.00.
Three Scenarios
Bullish: a close above 102.00 brings back dollar strength.
Bearish: a close below 101.00 targets 100.18.
Neutral: trade between 101.00 and 101.59 until the jobs data.
One tip: do not trade the first spike after news. Wait for the candle to close. Patience is a skill, so use it. Then see if price holds above or below 101.00. In the short term, payrolls decide the next move. In the long term, watch the Federal Reserve calendar for the December meeting. A hike would help the dollar. Our silver report shows how fast markets react to Fed talk. Stay flexible and respect your stops. Remember, this is a basket, so single pairs can act differently. Watch the data closely. Do you think 101.00 holds, or is the dollar heading lower?
Frequently Asked Questions
Why did the US Dollar Index fall?
The Democratic Party’s success during the midterm elections led people to believe there would be gridlock in Washington, which reduced the need to hold dollars as a “safe-haven.”
What is the key DXY support?
101.00 is first support. Below it, 100.18 is the next target.
What could lift the dollar again?
A positive job report, combined with an increased probability of a Federal Reserve rate increase in December, may result in the index returning to 102.00.
The post US Dollar Index Forecast: DXY Slips to a Five-Week Low appeared first in UK on InvestingCube .
