The euro gained 0.3% against the dollar on Monday while the dollar index slipped 0.1%, as currency markets braced for the U.S. midterm elections. The yen weakened toward a level that strategists flag as an intervention danger zone, and the euro stayed under pressure from a Fitch decision on France.
The U.S. dollar held steady against major peers on Monday as traders waited for the U.S. midterm elections. The dollar index slipped 0.1% to 101.75, and major currencies showed limited movement.
Expectations that U.S. interest rates could rise again before year-end offered the dollar support. Uncertainty over the election outcome, however, complicated the near-term outlook for fiscal policy and investor sentiment.
Euro weighed down by French debt concerns
The euro gained 0.3% to $1.1191. Even so, it remains under structural pressure after Fitch revised France's credit outlook to negative from stable on Friday, citing worsening debt dynamics.
Oil also sits at the centre of the macro trade. Elevated crude benchmarks have complicated the European Central Bank's inflation fight, capping the euro's upside even after the ECB left its benchmark rates unchanged last week.
Yen nears the intervention zone
The Japanese yen weakened slightly to 157.91 per dollar. Last week the Bank of Japan voted 8-1 to hold interest rates at 1.25%, leaving the yen caught between higher Treasury yields and the growing threat of intervention.
Foreign exchange strategists note that the 158.00-158.50 corridor remains a key USD/JPY intervention danger zone. Without an aggressive tightening signal from the BOJ, the yen stays highly sensitive to fluctuations in the U.S. yield curve.
Midterms and payrolls in focus
The 2026 U.S. midterm elections take place on November 3, with all 435 House seats and 35 Senate seats being contested. Prediction markets currently give Democrats about a 70% chance of controlling both chambers.
A Democratic sweep could increase regulatory pressure on AI companies, banks and cryptocurrency firms while limiting further fiscal expansion. Friday's employment report is expected to shape expectations for the Federal Reserve's next policy move.
Source: Investing.com
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