The euro rose to its highest value against the dollar for two and a half years in morning trading, as the big Trump-driven sell-off in greenback continues.
The euro today rose as high as $1.1869 against the dollar, surpassing its recent highs hit on Monday evening, before dipping. It has not been so valuable in dollar terms since January 2015.
Investors have balked at further political chaos in the White House, which has seen a string of high-profile resignations as well as rebellion from Republican party senators blocking key legislation.
Read more: The rise and fall of Trump's dollar
This is has led investors to doubt whether the administration of US President Donald Trump is capable of passing the tax cuts and fiscal stimulus anticipated by US investors.
After Trump's election the dollar surged as investors looked for a big boost to infrastructure and promised tax cuts for business and the rich. However, since peaking at the start of the year the dollar's fall has been precipitous, as Trump has failed to control policy opposition from within his own Republican party.
The trade-weighted dollar index fell to its lowest in 15 months on Monday, having fallen almost without interruption during July.
Meanwhile the European economy has outperformed expectations, with a string of electoral victories for pro-European politicians boosting optimism further.
The triumph of Emmanuel Macron as French President has been a particular boon for Eurozone sentiment.
Viktor Nossek, director of research at investment manager WisdomTree, said: "In securing an absolute majority in parliamentary elections, President Macron has a real chance to push through his pro-growth reform agenda – by decree if necessary. It presents the best possible political outcome to reinvigorate the long-term growth trajectory for not just France, but also for the Eurozone in general."
The dollar has also been weighed down by a slower expected pace of interest rate hikes by the Federal Reserve. The US central bank has been on a determined path of policy normalisation since the start of the year, but recent weakness in inflation data has weighed on prospects for a further rate hike this year.
Markets are currently only pricing in a 1.4 per cent chance of a rate hike in September, according to calculations by CME Group based on federal fund futures markets. However, chances of action by the December meeting are currently priced at 45.5 per cent.
Prospects for dollar strength in coming months are likely to be in the hands of the Fed, according to Richard Falkenhall, senior forex strategist, at SEB, the Nordic corporate bank. A move lower for the euro could be triggered by hawkish comments by Fed officials in upcoming speeches before the September meeting.
"However, if such remarks are not forthcoming over the next month or so, we would need to postpone our call for the next Fed hike to later this year or even move it into next year," he said.