Investing.com - The dollar slumped to the lowest levels in four months against a basket of the other major currencies on Monday as doubts about the Trump administration’s ability to deliver on campaign economic pledges rattled investors.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.72% at 98.87, its lowest trough since November 11.
The index had surged to almost 14-year highs in early January on the back of expectations for a strong economic recovery and higher inflation, the so called ‘Trump Trade’.
A planned vote on legislation to repeal and replace the Affordable Care Act was pulled on Friday night after it became apparent that it didn’t have enough support from Republicans.
The vote had been viewed by investors as a critical test of President Trump's ability to work with Congress to deliver on his pro-growth economic agenda, including tax cuts and infrastructure spending.
The dollar was down more than 1% against the traditional safe haven yen, with USD/JPY last at 110.23 after plumbing 110.12, the lowest level since November 18.
The euro advanced to its highest levels since early December, with EUR/USD climbing 0.74% to 1.0878.
The single currency hit the day’s highs after European Central Bank executive board member Sabine Lautenschlager said markets should prepare for a change in ECB policy.
The remarks added to speculation that the central bank is preparing for a withdrawal of quantitative easing.
Earlier in the day a report showed that German investor sentiment hit a 68-month high this month, suggesting that concerns over protectionism are easing.
The Ifo business climate survey jumped to 112.3 this month, from 111.1 in February.
Sterling was also higher against the weaker dollar, with GBP/USD advancing 0.96% to 1.2592.
The selloff in the dollar overshadowed concerns about Britain beginning the formal process of exiting the European Union later in the week.
Meanwhile, the Australian and New Zealand dollars were higher, with AUD/USD up 0.29% to 0.7646 and NZD/USD rising 0.56% to 0.7064.