Dollar index holds above 38.2% Fib ahead of the US midterm elections

• The Dollar Index (DXY) is holding above 96.04 (38.2% Fib R of 103.82/88.25).
• US midterm elections are expected to produce a split Congress.
• A Republican majority in both chambers could put a bid under the greenback.

The dollar index (DXY) is currently trading at 96.40, having defended the 38.2 percent Fibonacci support of 96.04 on Friday.

The greenback is trading in a sideways manner above the key Fib, likely due to caution ahead of the US midterm elections, which are expected to produce a split Congress - Democrats to take House and Republicans to retain the Senate.

The narrative in the market is that a Republican majority in both Chambers may embolden Trump to push for more fiscal stimulus. As a result, the greenback may pick up a bid if Republicans retain both House and the Senate.

On the other hand, the dollar may take a beating if the Democrats secure a majority in both Chambers and use their majority to investigate Trump's Russian ties and financial affairs.

Dollar Index Technical Levels