The US dollar index is down by 0.2% at 97.890 as of 9:46 a.m. ET on Wednesday.
That brings the dollar back to roughly where it was just before the US presidential election. The index closed at 97.861 on November 8, the day of the election, according to Bloomberg data.
Analysts have suggested that the currency is suffering from the tumult of news coming out of the embattled Trump administration in the wake of the firing of FBI Director Jim Comey and bombshell reports that the president shared classified information with Russian Foreign Minister Sergey Lavrov and Ambassador Sergey Kislyak.
In particular, markets may be worried that the recent developments could stall the economically stimulative tax and infrastructure policies many investors hoped for after the election.
“The US dollar has drifted lower against most of the major currencies as the culmination of news from Washington, escalating already rising concerns about the economic agenda that was to bolster growth with dramatic tax reform, infrastructure, and re-orienting trade,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman, said.
Further, recent economic data have been disappointing, which may also be weighing on the dollar. Chandler wrote, "The political morass that has engulfed the Trump administration is a major distraction at the same time that the investors had grown more concerned about the momentum of the US economy following the recent disappointment with retail sales, housing starts, and consumer prices."
The greenback climbed to a 13-year high after US President Donald Trump won the election in early November, and hit 103.01 in December. At least part of that appreciation was attributed to markets reacting to Trump's proposed fiscal policy initiatives.
However, the index has been giving up those gains over the last few months. Back in April, Trump said in an interview with the Wall Street Journal, "I think our dollar is getting too strong, and partially that's my fault because people have confidence in me." Treasury Secretary Steven Mnuchin later said in an interview with the Financial Times that Trump is "absolutely not" trying to talk down the strong dollar.
More recently, markets have switched into a more risk-off positioning amid the turmoil in Washington. The yen, gold, and US Treasurys are rallying on Wednesday, while US stocks and the dollar are down.
"Markets have displayed a [...] level of trepidation over the last 24 hours with politics being the dominant theme," Jim Reid, strategist at Deutsche Bank, wrote in a morning update.
"The Trump headlines concerning the revealing of sensitive information to Russian officials were initially at the forefront of that. That was largely attributed to the big drop in the US Dollar yesterday with the Dollar index falling -0.81% and to the lowest level since November 8th," he added.