The dollar fell on Wednesday after U.S. President Donald Trump called on Federal Reserve Governor Lisa Cook to resign, but pared gains after minutes from the Fed's latest meeting showed that only two policymakers supported an interest rate cut last month.

Trump cited allegations made by one of his political allies about mortgages Cook holds in Michigan and Georgia, intensifying his effort to gain influence over the U.S. central bank.

Trump has also told aides he is considering attempting to fire Cook, the Wall Street Journal reported on Wednesday.

"The market has voted with its pocketbook that it doesn't like when the president interferes with the Federal Reserve," said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

Trump has been critical of Fed Chair Jerome Powell for being too slow to cut rates, and traders expect he will replace Powell with a more dovish appointment when his term ends in May.

But Powell may stay on the board of governors, which would limit how many appointments Trump may make and could crimp plans to form a more dovish composition of policymakers.

"This is just a thinly veiled attempt to get control of the Federal Reserve, because if Powell doesn't step down as Governor when his chair ends, Trump's only appointment is the Kugler seat that he gave to Miran temporarily," Chandler said.

Trump earlier this month said he would nominate Council of Economic Advisers Chairman Stephen Miran to serve out the final few months of a vacant Fed seat after Fed Governor Adriana Kugler unexpectedly resigned.

The greenback came off its lows after minutes from the Fed's July 29-30 meeting showed that the two Fed policymakers who dissented against the U.S. central bank decision to leave interest rates unchanged last month appear not to have been joined by other policymakers in voicing support for lowering rates at that meeting.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last down 0.13% on the day at 98.20, with the euro up 0.09% at $1.1657.

The Japanese yen strengthened 0.32% against the greenback to 147.2 per dollar.

Traders are focused this week on whether Powell will push back against market expectations for a rate cut at the Fed's September 16-17 meeting when he speaks at the U.S. central bank's Jackson Hole meeting on Friday, following a weak jobs report for July.

Powell has said he is reluctant to cut rates on expectations that Trump's tariff policies will increase inflation this summer.

Consumer price inflation data for July showed limited impact from tariffs but hotter than expected producer price inflation has tempered expectations for how many cuts are likely this year.

Fed funds futures traders are currently pricing in 83% odds of a cut next month, and 54 basis points of cuts by year-end.

The New Zealand dollar dropped 1.12% to $0.5826, a four month low, after the country's central bank cut its policy rate by 25 basis points to a three-year low of 3.00% and flagged further reductions in coming months as policymakers warned of domestic and global headwinds to growth.

Source: Investing.com