Late Monday, two Republican Senators, Jerry Moran and Mike Lee, expressed their opposition to a revised healthcare bill aimed at dismantling and replacing Obamacare – a move which analysts described as a serious blow to President Trump.
"If the bills won't pass, there will be no money for tax cuts. The implementation of his fiscal policy will be difficult," Bart Wakabayashi, Tokyo branch manager of State Street, told Reuters.
FXTM chief market strategist, Hussein Sayed, said that it “seems markets are losing confidence that President Trump will be able to deliver on his promised plans”.
“Six months in office and with no major legislation signed into law, it seems that the “The Art of the Deal” hasn’t worked so far in US politics,” he said.
Separately, weak US inflation data on Friday and lacklustre retail sales figures also led to some analysts changing their forecasts for another interest rate rise this year from the Federal Reserve. Higher interest rates have generally supported the dollar in recent months.
The euro hit its highest level against the dollar since May last year.
US stocks and the dollar enjoyed a ferocious rally in the immediate aftermath of Mr Trump’s election victory in November, propped up by promises of tax cuts and regulatory rollbacks, but in recent months the rise in equities has slowed and the dollar has edged lower.
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