US Dollar Extends Losses on Lower Oil Prices and Yields

(MENAFN- MENAFNEditorial)

The US dollar remained under some pressure on Thursday, with Treasury yields lower across the longer end of the curve. Democrats won both chambers of Congress. That eased some concerns over potential trade barriers, crude oil prices, and subsequent Fed rate hikes, pushing market participants towards risk assets and Treasury bonds and cutting demand for the greenback.
The midterms results raised expectations that Congress could constrain President Trump’s room for manoeuvre on Iran, lowering the perceived risk of renewed military escalation. Oil prices fell to one-month lows, with WTI crude down more than 8% yesterday to below $90 per barrel, easing inflation concerns and adding to the pressure on yields. However, shipping through the Strait of Hormuz remains restricted, and a renewed rise in tensions could quickly lift oil prices again.

Monetary policy offers only partial support. Markets still price a 25-basis-point Federal Reserve hike in December, lending some support to short-term yields. However, bets on further tightening through mid-2027 have been pared back.
Looking ahead, lower oil prices and firmer risk appetite are likely to keep the dollar on the back foot. On the data side, Frid’y’s payrolls data is expected to show 65,000 new jobs. Weaker numbers would add to the current pressure, while a renewed escalation in the Middle East would also support the greenback through higher crude prices.
Elsewhere, expectations of tighter monetary policy at other major central banks could add to the do’lar’s retreat from the recent peak. Bank of Japan minutes strengthened bets on a December interest rate hike. In the Eurozone, accelerating inflation supports expectations of a similar move by the ECB in December. The Bank of England is expected to raise interest rates today, and guidance pointing to further increases could extend st’rling’s gains against the dollar.

MENAFN05112026000070015918ID1111920583