The US President kick-started a political row last night by firing FBI director James Comey, the country's top law enforcement official.
The shock dismissal caused the US dollar to pare recent gains. The dollar index, which tracks the currency against a basket of six major currencies, edged down 0.2 per cent to 99.415, according to Reuters.
Donald Trump said he fired Comey over the way he handled the email scandal involving his rival Hillary Clinton during the US presidential campaign.
However, the move raised eyebrows among the Democratic party, Trump's opposition, as Comey was the one leading the FBI investigation into alleged Russian interference in the Trump's 2016 election campaign.
The White House denied allegations of a political motive.
According to Reuters, Senate Democratic leader Chuck Schumer said he spoke to Trump and told him he was "making a very big mistake" in firing Comey and said the president did not "really answer" in response.
An independent investigation into Moscow's role in the election "is now the only way to go to restore the American people’s faith," Schumer said.
However, there was concern among both political parties. The Republican chairman of the committee overseeing the investigation into Russian interference during the election, senator Richard Burr, said in a statement he too was troubled by the timing of the firing of Comey.
"His dismissal, I believe, is a loss for the bureau and the nation," Burr said.
An FBI official told Reuters the Trump administration's decision to fire Comey "took even top officials by surprise".
The new director must be appointed by Trump and confirmed by the US Senate.