📰 Special edition this week, and it covers two charts: the US Dollar Index (DXY) and Nasdaq futures (NQ).
The DXY, which measures the dollar against six major currencies, fell to 101.21 on Wednesday, its lowest since September 30, as Democrats won both chambers of Congress. By Friday it closed around 102.28, above the previous Friday’s 101.88. The dollar took the election hit and recovered within two days.
The Nasdaq didn’t. It rallied Wednesday, fell 5.5% on Thursday, and finished the week down 3.4%, deep in a correction.
Both markets are pricing the same three things: who controls Washington, where the Iran war goes, and how far the Fed has to hike. They just react to them in opposite ways.
⚖️ The Seesaw
Day by day, when one went up, the other usually went down.
Wednesday: The dollar fell, and stocks rallied. Investors read the result as a calmer Washington and better odds of peace with Iran.
Thursday: Stocks crashed, and the dollar firmed. As chip stocks collapsed, money ran back to safety, and in this market, safety still means dollars and Treasuries.
Friday: A blowout jobs report pushed the dollar up 0.7%. The Nasdaq bounced 1.1%, mostly because Thursday had gone so far.
The simple version: right now, the dollar runs on interest rates and fear. The Nasdaq runs on AI and interest rates. They share rates, and they sit on opposite sides of fear. That’s the seesaw.
💵 DXY: Why the Dollar Is Where It Is
Pulling it down
Gridlock means less borrowing. A Democratic Congress can block new tax cuts and spending, though Trump’s veto protects existing laws. ING expects his domestic agenda to stall for his final two years. Less new borrowing eases pressure on long-term yields, making dollars less attractive to hold.
Peace with Iran weakens two dollar supports: demand for safety, and higher oil prices that fuel inflation and Fed hike bets. The election raised hopes of a deal, sending Brent down more than 16% this week. December hike odds fell to about 77% on Wednesday, from 84% a week earlier.
The “America is different” story also took a hit. The AI boom has drawn global money into US assets. TD Securities called the election result mildly negative for the dollar, saying it weakens the pillars of “US exceptionalism.”
Pushing it up
The Fed still wants to hike. Friday brought 165,000 jobs, against roughly 59,000 expected, while unemployment fell to 4.1%. December hike odds rebounded to roughly three in four after hitting 60% during Thursday’s rout. The Fed meets December 8–9.
Fear still pays the dollar. When US stocks lost about $3 trillion on Thursday, investors moved into US government bonds and dollars.
And the war isn’t over. After markets closed Friday, the US struck air-defense targets on Iran’s Qeshm Island. Trump called it “minor” and said talks were progressing. Iran says Hormuz stays shut until all seven conditions are met. Failed talks would revive both the oil and safe-haven trades, supporting the dollar.
The geoeconomic twist: everyone is hiking
The oil shock has pushed prices up worldwide, and other central banks are responding:
Bank of England: raised rates to 4% on Thursday, its first hike in over three years.
Bank of Canada: raised to 2.50% on October 28, its first hike since July 2023.
Reserve Bank of Australia: raised rates on Tuesday.
Bank of Japan: markets price an 80% chance of a hike on December 17–18.
Currencies strengthen when their rates rise faster than others. If the Fed hikes alongside everyone else, the dollar gains little extra advantage. That helps explain why a mostly priced-in December hike hasn’t driven a DXY breakout.
Further out, the election sets up a 2027 debt-ceiling fight over the legal limit on government borrowing. It’s not this week’s trade, but that political risk can hit the dollar quickly as the deadline approaches.
Looking at the weekly chart, the election dip did what a dip in an uptrend should do.
DXY (Dollar Index) Weekly Chart
DXY has climbed from its early-2026 low near 96, breaking above the grey weekly demand zone at 100.65-101.50 in September. This week’s sell-off tested it again, reaching 101.21 before buyers stepped in and left a long lower wick. Friday’s close was 102.28.
Above the October 14 high at 102.95 sits the grey weekly supply zone at 103.20-104.20. This is where the April 2025 tariff shock sparked the dollar’s slide from around 104 toward 96. Price hasn’t returned since.
The Fed and safe-haven demand helped the lower zone hold. The global hiking cycle and hopes of an Iran deal are why we’d expect real selling at the supply zone.
Macro lean: higher toward 103.20-104.20 while weekly closes stay above demand.
What could push it higher: hot CPI on Tuesday, failed Iran talks, or another stock-market rout.
What breaks the view: a weekly close below 100.65. Soft CPI, a signed Iran deal that drives oil lower, or the BOJ talking up a December hike could trigger that break.
📈 NQ: Why the Nasdaq Is Where It Is
Last week, we said NQ was heading for 27,500, the August low. On Thursday, it went straight through. The reasons are now more political than financial.
Domestic politics. AI needs land, electricity and state-issued permits. Tuesday’s vote pushed back against that build-out in key data-center states. Texas, its center, elected Gina Hinojosa as governor after she campaigned for a temporary pause on new data centers. Most of the 41 ballot measures aimed at slowing construction passed, according to Fortune. Thursday hit AI’s builders hardest: the Philadelphia Semiconductor Index fell 12.2%, while Nvidia lost 9.3%, erasing its gains for the year.
The war, through interest rates. Higher oil fuels inflation, keeping the Fed hiking and yields high. That hurts an AI build-out increasingly funded by borrowing: Morgan Stanley puts this year’s AI-related debt issuance at about $471 billion. Oil’s 16% fall should have helped tech, but Friday’s jobs report kept a December hike on the table.
China is next. Trump expects to meet Xi Jinping at the November 18-19 APEC summit in Shenzhen. For chip stocks, two issues matter: US export controls on advanced AI chips and China’s rare earth supplies. The US-China truce delaying China’s tighter rare earth controls now runs until January 10, 2027. A good meeting could give chips a reason to bounce. A bad one adds a third problem.
NQ (Nasdaq 100 Futures) Daily Chart
On the daily chart, NQ has made lower highs since peaking near 31,700 in early October.
Wednesday’s post-election bounce: stalled near 28,950, below 29,150, which invalidates the wider bearish view.
Thursday’s breakdown: the August low at 27,499.25 became first resistance.
Friday’s candle: hit 26,370, bounced to 27,400, then closed at 27,085.25. The old floor is holding as a ceiling.
Support: 26,370, then grey demand at 24,950-25,500, midpoint 25,200.
What breaks it: a daily close above 27,500 signals a false breakdown, opening 28,400-28,950.
Possible triggers: soft CPI, strong CoreWeave, Cisco or Applied Materials outlooks, or a Trump-Xi meeting easing chip export rules.
Below 27,500, we favour a move toward demand and will watch Tuesday’s CPI for a failed retest to sell rather than chase new lows.
🔮 What We Expect From Here
Because the two sit on the same seesaw, most scenarios move them in opposite directions:
Hot CPI on Tuesday: December hike locked in. Dollar pushes toward 103.20, and NQ rejects from 27,500 and heads lower.
Soft CPI: hike odds fall. The dollar slips back toward its demand zone, and NQ has its best chance to reclaim 27,500.
Iran talks move forward: oil falls further. The dollar loses some haven bid, and NQ gets relief from lower inflation fears.
Iran talks collapse: oil spikes. Dollar up, NQ down.
The one scenario that hurts both is a US-specific shock, like a sudden fight over AI rules or early debt-ceiling noise, when investors sell US stocks and the dollar together. Thursday showed money still runs to America when America wobbles. If that changes, it’s the biggest signal on this board.
🧩 Final Word
The dollar and the Nasdaq heard the same election result and drew opposite conclusions. For the dollar, a hawkish Fed and a scared stock market outweighed a calmer Washington, so it recovered in two days. For the Nasdaq, the election added a political problem on top of a spending problem, and nothing came to rescue it.
None of it has to go our way. On NQ, a daily close back above 27,500 tells us the breakdown failed. On the dollar, a weekly close below 100.65 tells us the uptrend has.
Stay Informed, Stay Patient, and as always… Happy Trading!
— The UE Market Letter Team 👁️🗨️
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