Investing.com - The dollar fell to two-week lows against the traditional safe haven yen on Wednesday and fell to its lowest levels in seven weeks against the Swiss franc as a widening political crisis in the U.S. pressured the greenback lower.
USP/JPY was down 0.95% to 112.04 by 08.56 ET, the weakest level since May 3.
News reports emerged on Tuesday that U.S. President Donald Trump asked now sacked FBI Director James Comey in February to halt an investigation into former National Security Adviser Michael Flynn’s ties with Russia.
The report raised concerns over whether Trump interfered with the judicial process and added to investor fears that the U.S. political system could become engulfed by crisis, preventing lawmakers from pushing through tax or spending reforms.
The latest revelations came as Washington was reeling after Trump fired Comey and then shared sensitive intelligence obtained from a close U.S. ally with Russia's foreign minister about an Islamic State operation.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.39% at a six month trough of 97.72 after ending the previous session down 0.81%.
USD/CHF was down 0.41% to 0.9819, the lowest level since March 27.
The greenback also came under pressure after weak U.S. housing data on Tuesday added to a recent run of disappointing economic reports and underlined uncertainty over the monetary policy outlook.
Odds for a June rate hike have dropped to around 64%, according to Investing.com’s Fed Rate Monitor Tool, down from more than 80% a week ago.
The euro touched fresh six-month highs, with EUR/USD up 0.23% at 1.1109.
Demand for the euro continued to be underpinned as investors shifted their attention back to the outlook for monetary policy as concerns over political risks receded.
Recent economic data has indicated that the economic recovery in the currency bloc is deepening, fueling speculation over how soon the European Central Bank could scale back its stimulus program.
The euro was lower against the stronger yen, with EUR/JPY dropping 0.93% to 124.19.