FILE PHOTO: U.S. dollar banknotes are seen in this illustration taken March 19, 2025. REUTERS/Dado Ruvic/Illustration/File Photo

By Joice Alves and Kevin Buckland

LONDON/TOKYO (Reuters) -The dollar fell on Thursday as traders added to bets that the Federal Reserve will cut interest rates next month after New York Fed chief John Williams signalled such a move was possible.

The U.S. currency has been under renewed pressure from President Donald Trump's ramped-up campaign to exert more influence over monetary policy, and as he attempted to fire Lisa Cook, one of the Fed's governors.

The currency fell against the euro even after France's prime minister on Monday unexpectedly called a confidence vote for next month, which looks likely to result in the fall of his minority government.

Williams said in a CNBC interview on Wednesday that it was likely rates can fall at some point but policymakers must see what upcoming data indicate about the economy to decide if a cut at the Fed's September 16-17 meeting is appropriate.

Key among data releases before that meeting are the PCE price index on Friday - the Fed's preferred inflation measure - and the monthly payrolls report a week later.

Traders currently lay around 84% odds of a quarter-point rate cut next month, and have priced in a cumulative 55 basis points of easing by year-end, according to LSEG data.

Trump's push to place hand-picked, dovish-leaning candidates on the central bank's decision-making committee also pulled short-term yields lower, even though his attack on Governor Cook could spark a protracted legal battle after she sued to keep her job.

"Short-dated U.S. yields remain near their recent lows, and most would conclude that this week's (attempted) removal of the Fed's Lisa Cook by President Trump is dollar-negative," said Chris Turner, global head of markets at ING.

The dollar index, which gauges the currency against six major peers, edged 0.17% lower at 97.952, following two days of declines.

The euro was 0.23% higher at $1.1665.

Against the yen, the dollar slipped 0.3% to 146.88 yen.

Japan's chief trade negotiator Ryosei Akazawa canceled a trip to Washington at the last minute on Thursday, delaying an announcement of the details of Japan's $550 billion investment pledge in the United States as part of a tariff deal.

A government spokesperson said the decision was taken after talks with the U.S. side revealed some points that need further discussion "at the administrative level".

The dollar slipped to its lowest level against China's offshore yuan since November, last down 0.3% to 7.1275 yuan in offshore trading.

(Reporting by Kevin Buckland and Joice Alves; Editing by Sharon Singleton and Hugh Lawson)