USD sentiment neutral as Tennessee election shows GOP margin erosion

The USD remains range-bound following the Tennessee House special election results, where Republican Van Epps secured victory but with a significantly reduced margin compared to previous wins exceeding 20 points. This political development adds to existing uncertainty around US fiscal policy direction, keeping major USD pairs in consolidation mode. EUR/USD trades near 1.0800, while USD/JPY hovers around 150.00 as traders await clearer policy signals from Washington. The narrowing political margins could complicate future fiscal legislation, potentially affecting dollar strength if gridlock concerns intensify. Market participants are monitoring whether this trend continues in upcoming elections, which could influence Fed policy expectations and Treasury yield dynamics. Near-term, the DXY index finds support at 104.50 with resistance at 105.20, suggesting continued sideways action until more decisive political or economic catalysts emerge.