What would cause the US dollar to weaken?
If Trump does not get the approval for his reforms on the tax bill, it would cast severe aspersions on the confidence of his leadership and consequently cause the dollar to weaken.
Oanda head of trading Asia-Pacific Stephen Innes believes the US dollar could face headwinds next year as the mid-term US elections may not swing in favour of Trump.
“With the President’s approval rating staying low, its possible the future mid-term US elections will swing and could possibly reduce the majority in both House and Senate and form a partisan perspective,” he said.
Innes said if such a scenario pans out, it would be impossible for Trump to push through any policy given his tenuous position.
“So without the 2018 infrastructure spend, markets may recalibrate their Federal Reserve expectation lower and weigh on US dollar sentiments,” he said.