Credit Agricole: USD Weakens as Post-Midterm Tech Selloff Raises AI Investment Concerns

The dollar is being hit by renewed weakness in US technology stocks following the midterms, reflecting the close link between USD performance and capital flows into the US tech sector. A stronger Democratic showing is seen as a headwind for the AI investment boom because of greater regulatory scrutiny around data-centre expansion, with several major data-centre states now under Democratic governors and facing tighter or proposed restrictions. The AI buildout is unlikely to stop, however, as investment could shift toward states with more supportive policy environments. That suggests the midterms may slow or redirect AI-related capital spending rather than end it. Near-term USD direction will therefore depend heavily on whether US technology stocks stabilise, with further weakness likely to favour traditional havens such as the CHF, JPY and EUR.