The US dollar steadied on Tuesday after a volatile start to the session, following an unprecedented move by President Donald Trump to dismiss Federal Reserve board member Lisa Cook, reigniting concerns over the central banks independence.

The euro and British pound were little changed against the dollar at 1.1617 dollars and 1.3461 dollars respectively, in line with muted moves in other currencies such as the Japanese yen and Swiss franc.

The dollar index, which measures the US currency against six others, held at 98.42, recovering from a roughly 0.4% decline after Trump announced the dismissal in a letter to Cook published on social media.

The move marked a sharp escalation in Trumps battle with the Fed, as he has repeatedly criticized Chair Jerome Powell for not cutting rates, though he has stopped short of threatening Powells removal with less than nine months left in his term.

Kenneth Broux, head of FX and rates research at Socit Gnrale, said: The story has been expected for a while, referring to Trumps ongoing pressure to reduce borrowing costs.

Trump justified his decision in the letter by citing allegations of misconduct in obtaining mortgage loans. But Cook responded that the president has no legal authority to dismiss her from the central bank, insisting she would not resign.

Markets are currently pricing in an 82% probability of a rate cut at the Feds September meeting. While investors may lean toward selling the dollar, persistent economic and financial concerns in Europe are limiting alternatives for betting against the US currency, according to Broux.

In Europe, French government bonds fell as the risk of a minority government collapse increased ahead of next months confidence vote, after opposition parties said they would not support Prime Minister Franois Bayrous budget-cutting plans. The 10-year government bond yield jumped about 4 basis points to 3.53%, its highest level since March.

ING analysts wrote in a note: The broader question for the euro is whether the latest French news will shake investor appetite for the single currency as a whole, or remain an isolated French problem.

In Asia, offshore Chinese yuan traded at 7.1635 per dollar, near its strongest level in a month, supported by gains in Chinese equities.

Cryptocurrencies remained volatile, with Bitcoin up 0.5% as it attempted to break a three-day losing streak, while Ether rose 1.5%.