• US Dollar declines due to Democratic midterm sweep and falling oil prices.
• Strong ADP hiring numbers and steady ISM service growth continue to support Fed rate hike expectations.
• Markets price in an 82% chance of a December hike ahead of key jobless and payroll data.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is extending its losses for the second consecutive day and reaching its monthly low of 101.20 during Asian hours on Thursday.

The Greenback faced heavy selling pressure following a Democratic sweep in the US midterm elections, which handed Democrats control of both houses of Congress and raised concerns over potential political gridlock in Washington. Additionally, market expectations of a swift end to the Middle East conflict triggered a sharp decline in oil prices, putting further downward pressure on the Greenback.

However, the US Dollar may gain support as resilient domestic economic data reinforced expectations for a Federal Reserve rate hike. The ADP employment report showed private-sector hiring increased by 86,000 in October, beating expectations of 69,000, despite September’s figure being revised down to 86,000 from 90,000. Meanwhile, the ISM Services PMI slipped slightly to 54.5 from 54.9, just below the 54.8 forecast, but remained firmly in expansion territory.

The CME FedWatch Tool indicates that markets are pricing in nearly an 82% chance of another rate hike in December. Investors are now awaiting key upcoming economic indicators, including weekly US Initial Jobless Claims on Thursday and the Nonfarm Payrolls (NFP) report on Friday.

Technical Analysis:

In the daily chart, Dollar Index Spot trades at 101.20. The index holds beneath both the nine-period and 50-period Exponential Moving Averages (EMAs), respectively, keeping the near-term bias bearish as recent rebounds have failed to reclaim these dynamic resistance lines. The 14-day Relative Strength Index (RSI) has slipped to roughly 43, below the neutral 50 mark, which hints at fading bullish momentum rather than outright oversold conditions.

On the topside, initial resistance is reinforced by the 50-period EMA around 101.27, with further supply expected at the nine-period EMA near 101.72; a daily close above the latter would be needed to ease immediate downside pressure. Until then, the technical posture suggests rallies toward these moving averages are likely to attract sellers, leaving the Dollar Index vulnerable to renewed slippage while momentum remains subdued.