US Dollar retreats as midterm election tallies trigger broad currency rally

The US Dollar Index dropped 0.5% to 101.34 as counting from the US midterm elections signaled Democratic gains and prompted expectations of fiscal gridlock. The retreat ended a multi-week greenback rally and pressured the 10-year Treasury yield down four basis points to 4.919%. The weaker dollar lifted major currency pairs, allowing EUR/USD to strengthen above 1.1200 toward 1.1235, supported further by ECB policymaker Joachim Nagel's comments favoring a December rate hike. Meanwhile, Asian currencies broadly advanced, though the Chinese yuan slipped after the PBOC raised foreign-exchange reserve requirements.