Trump suffered twin setbacks on Tuesday with two former advisers facing possible prison sentences - and one of them saying Trump told him to commit a crime - possibly hurting his Republican Partys November midterm election prospects and widening a criminal investigation that has overshadowed his presidency. This dampened investor appetite for riskier investments across asset classes.
Some analysts said renewed U.S. political uncertainty could keep the dollar under pressure, although the immediate currency impact was modest.
The dollar index, which fell sharply this week after Trump criticized the U.S. Federal Reserve's interest rate increases, fell 0.3 percent to 95.97.
"Political pressure on Trump is increasing ... reducing the likelihood that he will have the political capital to continue driving fiscal stimulus in the U.S. economy. This suggests to many market participants that the era of U.S. outperformance is likely to end," said Karl Schamotta, director of Foreign Exchange strategy and structured products at Cambridge Global Payments in Toronto.
Easing fears about a currency crisis in Turkey and the Italian budget, as well as short-covering, sent the euro up for the sixth consecutive day.
The euro gained 0.16 percent to $1.1587, close to the two-week high of $1.162 touched earlier in the session.
That marked a nearly three-cent rebound for the single currency from 14-month lows hit last week on fears of contagion from the Turkish currency crisis and renewed worries about Italian political turbulence.
"The euro is helped by a narrowing BTP/Bund spread, slightly lower U.S. real yields and most of all, short-covering," said Kit Juckes, foreign exchange strategist at Societe Generale, referring to the gap between Italian and German government bonds.
Minutes of the Fed's last meeting, due later on Wednesday, were expected to confirm it is on course to raise rates twice more this year.
The Fed released minutes from its July 31-Aug. 1 meeting on Wednesday, with Fed officials saying it will "likely soon be appropriate to take another step in removing policy accommodation."
However, the minutes also showed central bank officials are concerned that the ongoing trade war is the biggest threat to an otherwise "strong" economy.
The U.S.-China trade talks were set to begin later on Wednesday in Washington. Expectations were generally low given they do not involve high-level officials.
The dollar moved sideways against the Japanese yen at 110.44 yen. It had weakened to 109.76 overnight, its lowest since late June.