AI regulation concerns pressure the dollar after Democrats take Congress

Gold rises above $4,000 as investors seek safe-haven assets

The U.S. dollar fell sharply on Wednesday after Democrats won control of the Senate and House in the 2026 midterm elections, according to The Guardian. The dollar index, which measures the currency against a basket of six currencies, reached its lowest level in a month. The pound and euro gained against the dollar, and the U.S. currency also weakened against the yen and Swiss franc, currencies that traders tend to favor during times of uncertainty.

Investors moved into U.S. Treasuries, which The Guardian described as a safe haven from the political gridlock anticipated during the rest of Donald Trump’s final term in office. The Guardian reported that the 10-year Treasury yield fell by almost five basis points to 4.915%. Separately, the raw observation in FRED’s DGS10 series was 4.91% for Nov. 4, 2026.

The Guardian described the result as a Democratic “blue wave” and reported that Democrats secured Senate seats in Texas, Iowa, North Carolina and South Carolina. The Guardian’s photo caption said, “American voters rejected Donald Trump and the Republican party’s agenda across the country.”

Investors were reassessing how much of Trump’s agenda could advance under a Democratic-controlled Congress, said Axel Rudolph, chief technical analyst at trading platform IG: “The scale of the losses will inevitably raise questions about Trump’s ability to push through his agenda over the next two years, and markets are already reacting. The dollar is under pressure as investors reassess the political outlook, while gold and silver are benefiting as safe haven plays.”

Stock-market trading initially pointed to a sharp opening loss for Wall Street, with the tech-heavy Nasdaq expected to slide on concerns about the prospects for AI companies. Later indicators suggested Wall Street could open higher after Trump’s conciliatory tone and gains in European markets cheered investors. AI-related shares tumbled during Asian trading hours on expectations that Democrats would seek greater regulation of the sector.

“Some individual names are nursing significant losses today,” said Kathleen Brooks, the research director UK at XTB. “SpaceX is down 5% in the premarket, and Tesla is lower by more than 4%. Elon Musk is considered an anathema to most Democrats.”

The Guardian described Musk as the world’s richest person and reported that he pumped $446m (£331m) into the midterms, funding Republican-aligned political action committees and groups. Brooks said investors were reacting to expectations that a Democrat-controlled Congress could mean greater scrutiny for AI companies, which could also cast doubt on a potential merger between Musk’s two companies.

Gold, a traditional safe-haven asset, rose 2.2% and moved above $4,000 an ounce, according to The Guardian. The move added to Rudolph’s assessment that gold and silver were benefiting as safe-haven plays.

Tapas Strickland, chief market strategist at Moomoo ANZ, said the fear was that “the pace of the AI infrastructure rollout could slow, potentially quite markedly in Texas, as they start to digest exactly what mandate they might have in terms of AI.”

Jesper Koll, an expert director at Monex Group, said: “The AI momentum has turned negative, with or without the Republicans having a majority. The starting point for financial markets into this election, particularly for the equity market, has been adverse on AI.”

Trump’s style of governing through executive orders prompted some analysts to question whether Democrats’ return to control of Congress would substantially change U.S. policymaking. Tai Hui, a market strategist at JP Morgan Asset Management, said: “There’s still a number of areas where Donald Trump can influence the markets – trade and tariffs, foreign policy, and existing regulations.”

The Guardian tied the market reaction to fears that greater AI regulation could slow economic growth, political gridlock and uncertainty over Trump’s ability to push through his agenda. The cross-asset picture was mixed: the dollar and some AI-related shares weakened, while Treasuries, gold and the yen and Swiss franc drew demand.