By Suryatapa Bhattacharya

TOKYO--The U.S. dollar fell to its lowest level against the yen since late November as the House Republicans' failure to pass their long-promised health-care bill gave investors another cue to buy other major currencies.

The yen strengthened as much as 1.04%% against the dollar, to trade at ¥110.16 around 0630 GMT, according to EBS. That was the dollar's lowest level against the Japanese currency since Nov. 18. The euro rose to $1.0849, its highest against the dollar since Dec. 8. The Wall Street Journal Dollar Index, a measure of the dollar against a basket of 16 currencies, was 0.5% lower at 89.56.

"This is the market reacting to Donald Trump's failure to implement one of his major campaign promises," said Bart Wakabayashi, Tokyo branch manager for State Street.

The setback for the White House has strengthened uncertainty over the U.S. administration's ability to push through its agenda. It added further momentum to an unraveling of support for the dollar that has picked up steam since the Federal Reserve's decision to raise U.S. interest rates without ramping up its expected pace for further increases.

Investors see the U.S. administration's failure to secure the votes needed to pass the health-care bill as a "harbinger of things to come," said Mr. Wakabayashi. "They see it as a lot of opposition to his policies. They see general risk on trade and fiscal policy, and a lot of promises we may have to revisit and cross out some of them."

Foreign-currency investors may now see the dollar falling toward the ¥108.20-level as they take short positions, said Mr. Wakabayashi.

The U.S. dollar at the Y110-range may not ring alarm bells for Japan's top exporters just yet, but a stronger yen does start to build pressure on corporate earnings and capital expenditure. Car makers Toyota Motor Corp. and Honda Motor set their foreign-exchange rate forecast for the fiscal year ending in March 2017 at 107 yen to the dollar, while Nissan Motor Corp.'s foreign-exchange forecast is at Y105 to the dollar. "Right now it is actually a kind of neutral range for manufacturers in Japan. They can still gain profit to some extent. If it goes below 105-100, I think first the government will have some concerns," said Daiju Aoki, senior Japan economist with UBS.

It will take robust monthly U.S. employment figures or hawkish guidance from the Fed to stop the slide, said Masashi Murata, currency strategist at Brown Brothers Harriman in Tokyo.

The euro also continued to gain against the dollar. There are "no incentives to prompt investors to sell" the euro right now, said Daiwa Securities senior FX strategist Yukio Ishizuki.

-Hiroyuki Kachi contributed to this article.

Write to Suryatapa Bhattacharya at suryatapa.bhattacharya@wsj.com

 
 
Interbank Foreign Exchange Rates At 01:50 EST / 0550 GMT 
 
                         Latest     Previous   %Chg   Daily   Daily    %Chg 
                                    2150 GMT          High    Low      12/31 
USD/JPY Japan           110.31-32      111.33-34  -0.92   111.33   110.26  -5.72 
EUR/USD Euro            1.0845-48     1.0798-801  +0.44   1.0852   1.0800  +3.11 
GBP/USD U.K.            1.2528-30      1.2473-75  +0.44   1.2535   1.2474  +1.49 
USD/CHF Switzerland     0.9876-80      0.9911-15  -0.35   0.9913   0.9875  -3.05 
USD/CAD Canada          1.3328-33      1.3376-81  -0.36   1.3379   1.3323  -0.83 
AUD/USD Australia       0.7632-36      0.7620-24  +0.16   0.7637   0.7614  +6.00 
NZD/USD New Zealand     0.7051-57      0.7026-32  +0.36   0.7055   0.7029  +1.86 
 
Euro Rates 
 
EUR/JPY Japan           119.61-65      120.19-23  -0.48   120.21   119.61  -2.82 
 
Source: Tullett Prebon

(END) Dow Jones Newswires

March 27, 2017 02:54 ET (06:54 GMT)

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