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The dollar languished near its lowest level in nearly three years on Thursday after Democrats won control of the U.S. Senate, clearing the way for a larger fiscal stimulus under President-elect Joe Biden.

Currency markets were largely unperturbed by scenes of chaos in Washington as supporters of outgoing President Donald Trump stormed Capitol Hill.

Analysts generally assume a Democrat-controlled Senate would be a net positive for economic growth globally and thus for most risk assets, but negative for bonds and the dollar as the U.S. budget and trade deficits may widen further.

The dollar index was little changed at 89.321 in early Asian trade on Thursday, after dipping to its lowest since March 2018 at 89.206 overnight.

The yield on the benchmark 10-year Treasury note climbed as high as 1.054% on Wednesday for the first time since the market mayhem of mid-March.

Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo, sees the dollar’s fortunes split with Democrats controlling both Houses.

“The dollar will remain weaker against commodity currencies like the Aussie and emerging market currencies,” which benefit when risk sentiment is positive, he said.

At the same time, “higher Treasury yields should benefit the dollar against the euro and the yen, because the dollar has underpriced the potential for U.S economic recovery under Biden.”

The riskier Australian dollar was little changed at 78.025 U.S. cents after touching a nearly three-year high of 78.195 on Wednesday.

The euro gained 0.1% to $1.23385, approaching the $1.2349 level it reached Wednesday for the first time since April 2018.

The dollar fell 0.1% to 102.965 yen, after dipping to 102.595 on Wednesday for the first time since March.

But after a fall of nearly 7% in 2020 for the dollar index and a drop of as much as 0.9% in the new year, the U.S. currency may get some respite from some unwinding of a crowded trade.

“People have been bearish on the dollar now for at least six or nine months,” said Minh Trang, senior FX trader at Silicon Valley Bank in Santa Clara, California.

“Obviously you are going to have to take a little bit of a breather every now and then.”

Bitcoin marked a fresh all-time high of $37,386 on Thursday, extending a surge of more the 800% since mid-March.

The dollar fell against major peers on Tuesday as China set the official yuan exchange rate at the strongest since abandoning its peg in 2005, which helped support demand for other units.

The Australian dollar led gains in major currencies as the move by the People’s Bank of China (PBOC) encouraged broad dollar selling.

Earlier, the greenback had found support as concerns about surging Covid-19 cases and uncertainty about U.S. runoff elections in Georgia spurred a retreat in U.S. stocks from record highs to start the year and kindled demand for safer assets.

While investor caution about the yuan’s heady rally prompted some later selling in the Chinese currency on Tuesday, the PBOC’s action nonetheless lifted risk sentiment in currency markets.

“If the Chinese currency is going up, it’s providing a degree of support for Asian currencies in general, and I suspect that’s why the U.S. dollar is partially reversing the gains that we saw from Wall Street time,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.

“It’s a very big move by any historical yardstick, and I don’t think you can ignore that.”

The PBOC set the official yuan midpoint at 6.4760 per dollar prior to the market open, 1% firmer than the previous fix, also the biggest change since 2005.

In the offshore market, the yuan strengthened as far as 6.4419 for the first time since June 2018. It started the week at 6.4944.

The Aussie dollar, a barometer of risk appetite that also tends to follow the yuan, jumped 0.5% to 77.022 U.S. cents in the Asian session, approaching the 2-1/2-year high of 77.43 touched on the final day of 2020.

The dollar index weakened 0.2% to 89.731. It dropped as low as 89.415 on Monday for the first time since April 2018, but ended the day with a 0.1% gain after U.S. stocks slid.

“Until the vaccines are rolled out globally, the market will continue to be driven by COVID headlines, so it’s a bit of a volatile time,” said Shinichiro Kadota, senior currency strategist at Barclays Capital in Tokyo.

“But generally positive risk sentiment should continue this year, and with that, dollar continues to weaken against riskier currencies. We expect Chinese yuan to be one of the outperformers.”

The dollar fell 0.1% to 103.010 yen. It dropped as low as 102.715 on Monday for the first time since March.

The euro rose 0.1% to $1.22690 after reaching $1.231 on Monday, a level not seen since April 2018.

The British pound gained 0.1% to $1.3583.

Sterling has been swung by a surge in infections of a fast-spreading new coronavirus strain in the UK, with Prime Minister Boris Johnson ordering a nationwide lockdown.

It slid 0.73% on Monday, the most since Dec. 10, after earlier rising to $1.3703, a level not seen since May 2018.

Bitcoin traded at $31,407 following a roller-coaster ride to start the new year that took it to a record high of $34,800 on Sunday, followed by a tumble to as low as $27,734 the following session.

The dollar started the new year more or less where it left off – under pressure from investors who reckon low U.S. interest rates and an eventual worldwide recovery from the coronavirus pandemic will make it a laggard against other major currencies.

In early Asia trade on Monday, still thinned by holidays, some short sellers were again adding to bets against the dollar and unwinding a small bounce it enjoyed on the last trading day of 2020 when profit-taking lent support.

The euro rose 0.2% from its New Year’s Eve closing level to $1.2244, while a media report that Japan is considering a state of emergency for Tokyo pushed up the yen by about 0.3% to 103.05 per dollar.

Japan’s Fuji TV reported an emergency may be declared for as early as this week, as the Japanese capital grapples with record levels of infection. Prime Minister Yoshihide Suga is due to hold a news conference to mark the start of 2021 at 0200 GMT.

That news also unwound what had been small early gains for the Australian and New Zealand dollars, which fell back to around steady by 0045 GMT, with the Aussie at $0.7681 and the kiwi at $0.7181.

Surging coronavirus cases also held back gains in sterling, which was steady at $1.3669 after British Prime Minister Boris Johnson said on Sunday tougher lockdown restrictions were probably on the way as Covid-19.

Still, the Chinese yuan, which has become a favored vehicle for shorting the dollar as China’s economy rebounds impressively, climbed roughly 0.2 to 6.4927 per dollar in offshore trade, close to testing a 2-1/2 year low.

Soaring cryptocurrency bitcoin also extended its record-smashing rally, and was just below a record high of $34,800 hit on Sunday. It rose 300% in 2020 and has gained more than 65% since crossing $20,000 just over two weeks ago.

The Singapore dollar touched a 32-month high of S$1.3203 per dollar after data showed Singapore’s economy, which is a bellwether for global trade, contracted slightly less than expected in the fourth quarter.

Elsewhere, traders have an eye on Tuesday’s runoff vote in the U.S. state of Georgia, which will determine control of the Senate and so the fate of President-elect Joe Biden’s agenda.

Voters have not elected a Democrat senator in Georgia in 20 years and if either or both Republican incumbents win, their party would retain a narrow Senate majority.

A Democratic sweep could trigger further dollar weakness, as investors assume it would lead to higher stimulus spending which would in turn boost market sentiment and weigh on the dollar.

The dollar posted its largest annual loss since 2017 last year as, after March’s panic subsided, it settled in to a downtrend that has only drawn more traders to short it.

Against a basket of currencies the dollar was a fraction below where it ended 2020 at 89.766.

Benchmark 10-year U.S. Treasury yields began the year firmly at 0.9298%. But that is almost 100 basis points below where they began 2020 and a turn-off for yield-chasers.

Minutes of the Federal Reserve’s December meeting due on Wednesday should offer more detail about making their forward policy guidance more explicit and the chance of a further increase in asset buying this year – another anchor on yields.

The dollar was ending 2020 in a downward spiral on Thursday with investors wagering a global economic recovery will suck money into riskier assets even as the yawning U.S. twin deficits argue for an ever cheaper currency.

The euro steamed ahead to $1.2281, having hit its highest since April 2018 with a gain of almost 10% for the year. The next stops for the bull train are $1.2413 and $1.2476, on the way to the 2018 peak at $1.2555.

The dollar also dropped to 103.07 yen, but stopped just short of the December low at 102.86. Trade was thin in Asia with Japan and South Korea on holiday.

Sterling jumped as lawmakers approved a post-Brexit trade deal with the European Union. The pound stretched as far as $1.3647, levels not seen since May 2018.

Against a basket of currencies the dollar had sunk to 89.62, having touched it lowest since April 2018. That left it down 7.2% on the year, and no less than 13% on the 102.99 peak hit during the market mayhem of mid-March.

The next target is 89.277 and then 88.251, which was the absolute low in 2018.

The prospect of a brighter 2021 has lessened the need for the safe-haven dollar, while burnishing the attraction of riskier assets especially in emerging markets.

Bears have also resurrected the “twin deficits” excuse for shorting the dollar – that the explosion in the budget and trade deficits means more dollars being printed and moved abroad.

From this perspective the new U.S. stimulus bill is dollar negative as it adds to the nation’s debt, and President-elect Joe Biden is promising a lot more next year.

The country is also hemorrhaging dollars on its trade account where the deficit on goods hit a record $84.8 billion in November as imports surged past pre-pandemic levels.

Likewise, the current account deficit widened to a 12-year high in the third quarter and there was a large shortfall in net financial transactions as Americans borrowed more from abroad.

In contrast, the European Union runs a huge current account surplus, largely thanks to Germany, so there is a natural inflow to euros through trade.

“The U.S. dependence on foreign savings is increasing and at 3.4% of GDP, it is approaching a danger zone where it will become increasingly difficult to attract savings without further dollar weakness, or higher interest rates,” said Alan Ruskin, global head of G10 FX at Deutsche, in a note.

“The deterioration in the ‘twin deficits’ will do nothing to improve USD sentiment, even if it does not as yet justify extreme USD undershooting either.”