The dollar sank Tuesday as two Republican senators rejected their party's bill to repeal Obamacare, effectively killing it and throwing Donald Trump's economic agenda into doubt.
"European equities are suffering under a weaker dollar after the Republican healthcare bill once again failed to achieve US congressional approval, denting hopes of Trump stimulus and adding to poor US data that has cut the odds of a September rate hike," said Accendo analyst Mike van Dulken.
The pound retreated on official data showing annual British inflation unexpectedly slowed to 2.6 percent in June, dimming the prospect of a Bank of England interest rate hike any time soon.
Since Trump's election victory in November, the dollar has soared along with global markets on hopes his big-spending, tax-cutting policies would fire up the world's top economy and fan inflation.
But seemingly never-ending crises have hobbled his presidency from the start, with opposition to Trump's controversial health care reforms-crucial to freeing up cash-raising questions about his ability to push through other big-ticket measures.