The US dollar fell sharply against major currencies on Wednesday as early results from the US midterm elections showed Democrats making strong gains in their bid to wrest control of Congress from President Donald Trump’s Republicans. Investors sold stocks, moved away from the dollar and sought the safety of US Treasuries.

The euro rose 0.5% to $1.1249, while the yen strengthened 0.7% to 157.63 per dollar. The dollar index, which measures the greenback against a basket of six currencies, fell 0.3% to 101.4.

Democrat Annie Andrews won South Carolina’s Senate seat, defeating Republican Darline Graham in a state Trump carried by nearly 18 percentage points in 2024. Her victory, along with Democrat Roy Cooper’s win in North Carolina, gave the party two of the four additional seats it needs to take control of the Senate.

Prediction markets also indicated growing expectations of a Democratic sweep of Congress.

“The US dollar could sell off further from here, because a Democratic sweep would limit government spending over Trump’s term,” said Carol Kong, currency strategist at Commonwealth Bank of Australia.

Kong said investors were also watching the risk of an escalation in the Middle East following the elections.

“If the Republicans do lose control of the House and the Senate, what will the President do? He previously flagged that he will restart a bombing campaign in Iran after the election, so we are watching that very closely,” she said.

“If he does ramp up the aggression in the conflict, then we could see oil prices jump sharply higher, and that will support the US dollar.”