Singapore: The dollar is set to extend its decline as the turmoil engulfing US President Donald Trump will make it harder for him to deliver his pro-growth agenda, some of the best currency forecasters say.

Westpac Banking Corp., the second most-accurate currency forecaster in Bloomberg’s most recent rankings, is advising clients to sell the dollar against a basket comprising the euro, yen and loonie. Macquarie Bank Ltd., among the top 10, expects the greenback to decline further versus the currencies of Japan and the euro.

The dollar has lost almost all its gains chalked up since Trump’s victory in November, following reports he shared classified intelligence with Russian diplomats and that he asked FBI Director James Comey to end a probe into former National Security Adviser Michael Flynn.

Options traders turned bearish on the dollar against the euro last week for the first time since Nov. 8 after Emmanuel Macron won the French election, according to one-month risk reversals.

“It seems clear that a political risk premium is being removed from the euro and instead placed on the US dollar,” said Sean Callow, a senior currency strategist at Westpac in Sydney. The turmoil “will at the very least linger as a distraction that makes it more difficult for the White House to pass pro-growth policies.”

The dollar may weaken as much as 2 per cent against the euro, yen and Canadian dollar by the end of the month, before stabilising in June, Callow said. Central bank meetings in the US and Europe next month are likely to favour the dollar as the Federal Reserve is expected to raise rates, he said.

Bullish bets on the greenback have been toppled as the world’s most popular trade after five months, according to a Bank of America Merrill Lynch survey of fund managers. Hedge funds have cut net long positions to an 11-month low.

Tepid data on US retail sales, inflation and housing starts have cast doubts on the Fed’s ability to raise interest rates two more times this year, as suggested by its so-called dot plot. Futures traders are pricing in just one more increase this year.

Goldman Sachs Group Inc. became the latest bank to dial down its dollar forecast last week. It expects the greenback to trade at $1.05 per euro in 12 months, compared with a previous $1.00, the bank said in a note. That follows Societe Generale SA saying earlier this month that the dollar has peaked.

The dollar’s losses may be limited as Fed officials continue to speak about more interest rate hikes this year, said Mansoor Mohiuddin, a Singapore-based strategist at NatWest Markets, a unit of Royal Bank of Scotland Group Plc. The Republican Congress will want to keep President Trump’s position secure, preventing political risks from ballooning, he said.

Before this week’s turmoil, Trump was already mired in a battle over health care and is preparing for a fight over government spending, with debate over his plan to slash corporate and individual taxes yet to come. His administration is now facing calls for more clarity from both Republicans and Democrats over this week’s disclosures.

“Confidence in the dollar does seem to have been undermined in recent weeks, as US economic growth momentum slows,” said Gareth Berry, a foreign-exchange and rates strategist at Macquarie Bank in Singapore. “Multiple legislative showdowns seem to be looming, and Trumpian stimulus will be hamstrung until these obstacles are cleared.”