The US dollar rose against the euro and British pound on Wednesday, though investor concerns about Federal Reserve independence still linger, potentially limiting the currencys upside.

The euro fell about 0.4% to 1.1593 dollars, while the pound slipped 0.3% to 1.3441 dollars, giving back some gains made after US President Donald Trump announced Monday his plan to dismiss Fed board member Lisa Cook over alleged mortgage-related misconduct.

Cooks attorney later said she would file a lawsuit to block her removal, setting the stage for a potentially lengthy legal battle.

Trumps unprecedented attempt to dismiss a Fed board member adds to the ongoing pressure he has exerted on the central bank to cut interest rates since returning to the White House this year.

Although the dollar appeared to have moved past immediate concerns about Fed independence, Trumps actions contributed to a steeper US yield curve.

Jamie Cox, managing partner at Harris Financial Group, said: Trump has essentially taken over the Feds forward guidance function right now, telling markets that rate cuts are coming, which is reflected in the curve steepening.

The two-year Treasury yield which typically reflects near-term interest rate expectations fell on Wednesday to 3.6540%, its lowest since May 1, as traders ramped up bets on imminent Fed easing.

In contrast, longer-term yields rose amid fears that early monetary easing could reignite inflation. The 30-year yield edged up to 4.9223%.

Lee Hardman, currency strategist at MUFG, said: Dollar strength may reflect that market participants are still waiting for stronger confirmation from August jobs data and inflation reports on whether the Fed will go ahead with plans to resume rate cuts next month.

Money market pricing currently shows an 87% probability of a 25-basis-point rate cut in September, according to CME FedWatch.

In Europe, political developments in France remain in focus for the euro, as Prime Minister Franois Bayrou seeks to save his fragile minority government.

Analysts at DBS Bank wrote in a note: While we dont dismiss the short-term political risks in France, we also take into account ECB President Christine Lagardes optimism about economic recovery and her ambition for the euro to achieve a greater international role.

French government bonds steadied on Wednesday, after the benchmark 10-year yield jumped Tuesday to its highest level in five months. European rating agency Scope sees a government collapse in France as the most likely outcome.

Elsewhere, the US dollar rose about 0.2% against both the Japanese yen and Swiss franc, while the New Zealand dollar fell 0.4% to 0.5834 dollars.