Key Takeaways
- The US will hold its next midterm elections on November 3, 2026.
- Whether Democrats or Republicans win control of the House and Senate could reshape the country’s political and legislative landscape.
- That could in turn affect demand for the dollar and exchange rates, which is especially important if your business relies on USD/EUR FX conversions.
- Here’s how you can prepare for rate changes — and how Payset can help.
What Are the US 2026 Midterms?
The US midterm elections are a vote that occurs halfway through every presidential term. The next midterm vote is set to occur on November 3, 2026.
It’s an event that has a far-reaching impact on the political landscape. Although the US presidency is not up for re-election, voters will elect members of the House and some members of the Senate, as well as state and local officials.
The elections in Congress are especially important as they determine the balance of power in the House and Senate. Whether the Republicans or Democrats win control will influence future policy and legislation, with indirect effects on the USD exchange rate.
In short, the midterms stand to reshape the US political and legislative landscape, with potentially significant effects on the dollar-to-euro price forecast.
What’s at Stake in the 2026 US Midterms
Republicans have controlled both chambers of Congress since the 2024 election, but a shift in power could impact US policy and legislation. That includes changes in these key areas:
- Tariffs and trade policy: US President Donald Trump’s tariffs could stay in place if Republicans maintain control of Congress, but would likely be met with resistance if Democrats gain control in either chamber.
- Fiscal policy: A Democratic victory in Congress could produce strong opposition to the Republican Party’s tax and spending proposals.
- AI and deregulation: The Republican Party’s support for AI development and reduced regulation could face resistance in the event of a Democratic victory.
- Government shutdown risk: If control of Congress is split, disagreement over policy and legislation could disrupt government operations.
- Interest rates and inflation: Policies that follow from the midterms could influence the Federal Reserve’s future interest rate decisions, though the Federal Reserve ultimately makes its decisions based on multiple factors.
These factors have an indirect rather than a direct effect on the dollar. That means they affect market sentiment and demand for the dollar and dollar-denominated assets, which in turn can influence the USD/EUR exchange rate.
Three Midterm Outcomes and What They Could Mean for USD/EUR
Each party’s control over Congress could also affect the market value of USD. Below, we’ll explain ING researchers’ analysis of three potential midterm outcomes.
Democrats Win Both Chambers
If the Democrats win both the House and Senate, ING projects the dollar will weaken slightly as Democrats combat Republican policies. However, Democrats’ ability to pursue their own policies will still be limited by the executive branch.
ING says that political analysts are divided between a Democratic victory and a split Congress, though prediction markets price a Democratic victory as most likely.
A Democrat–Republican Split
Democrats may win the House while Republicans keep control of the Senate. ING believes the market points to this: “the dollar broadly prices in this scenario,” it says.
ING suggests elevated inflation and interest rate hikes are likely to remain the focus for markets in this scenario. However, it warns that the possibility of a prolonged government shutdown could put downward pressure on USD in late 2027.
Republicans Control Both Chambers
Finally, ING projects that the US dollar could rise if Republicans maintain control over both chambers. Republicans may aggressively pursue looser fiscal policies, raising fiscal sustainability fears but potentially pushing bond yields higher.
ING says this outcome would be “the most positive for the dollar” cyclically, though it expects a Republican victory is the least likely result overall.
What a 3% Rate Change Would Mean if You Pay or Invoice in USD
How much change in FX rates should you plan for? Few predictions are tied specifically to the midterms, but Reuters has published a broader outlook.
Reuters reports EUR could gain 3% against USD over three to six months, with some variations in expectations, based on a recent survey of almost 70 forecasters.
To illustrate, we’ll assume your business transfers $100,000, either in a single transaction or over a longer period. If you pay euro-denominated amounts in USD, a 3% stronger euro means you’ll pay about $3,000 more on every $100,000 you convert.
But the direction of trading matters: if you’re collecting inbound payments in euros, you’ll get about $3,000 more value on every €100,000 you convert to USD.
We emphasise that our illustration isn’t a prediction that the USD/EUR rate will shift by 3%. It also doesn’t show the impact of starting exchange rates, reciprocal rates, or service fees. It’s simply a guideline to consider as you plan ahead.
Ways to Manage Your FX Risk Before November 3
Review Your Upcoming Payments
First, look at your upcoming transactions. If you have a US-based business, consider your outgoing USD payments and inbound EUR payments.
November 3 is the day that midterm results begin to emerge, which could trigger market movements. However, you should also take a broader outlook: USD/EUR rates could change before the midterms, after the midterms, or hardly at all.
Strategise Around a Downturn
Next, account for a weaker dollar. ING’s analysis of a Democratic midterm victory and Reuters’ broader outlooks both point to a weakening dollar.
This means that if you’re spending USD on euro-denominated invoices and bills, you may want to offset the costs in other ways. Compare FX fees across different platforms, see if you qualify for tiered FX discounts, and consider adopting hedging strategies.
Think About How You Can Benefit
Remember that a weaker dollar isn’t necessarily a cost. If you receive payments in EUR and convert to USD, you’ll receive more value on every euro.
And remember that a weaker dollar isn’t certain. Some outcomes could increase the value of the dollar or stabilise FX rates. Consider holding both USD and EUR and making payments in each currency when the market rate is most favorable to you.
How Payset Can Help
At Payset, we cater to US companies and global companies alike, offering USD accounts, US/EUR FX services, and US IBANs. Whether the United States is your main market, or you’re working with international clients, suppliers, and teams, you’ll get a multi-currency business account that meets your needs.
Here’s what you can expect:
- Access to USD: Transact and trade the US dollar from your Payset account.
- Support for up to 34 currencies: Go beyond USD by trading and transacting in EUR, GBP, and other available currencies from your multi-currency account.
- Local payment rails: We route payments on US networks like ACH, Fedwire, and on global networks like SWIFT and SEPA when applicable.
- Support for US businesses: Companies incorporated in the United States can open a Payset multicurrency business account alongside global users.
- Competitive FX rates: Get competitive, real-time exchange rates with tiered FX pricing that help you pay less the more that you trade.
Set up a USD/EUR rate alert to monitor rates and set a target.
Ready to sign up? Get started with Payset today.
FAQ
How could the 2026 US midterms affect the USD/EUR exchange rate?
The midterms will determine which parties hold power in Congress and affect future policy. ING researchers believe that a Democratic victory could weaken the dollar, that a Republican victory could strengthen it, and that a split outcome is broadly priced in.
Is the US dollar expected to weaken after the 2026 midterms?
While some predictions expect a weakening dollar, it’s not guaranteed. Businesses should track rates in real time, plan for different outcomes, and strategise accordingly.
How can businesses manage USD/EUR exchange rate risk?
Businesses can manage risk by holding both USD and EUR, monitoring rates, timing payments when FX rates are most favourable, and structuring trading to qualify for tiered FX rates. Multi-currency accounts like Payset can help you pursue these strategies.
