I have reported this issue with MS Support - Request #175249 (MANUAL Cache - Unable to resize or change the folder location).
In the meantime, this is the response received from MS Support:
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Thank you for bringing this matter to our attention. This issue has been tracked in our internal bug tracker thanks to the information you provided.
While we are unable to predict when a specific bug will be fixed in-game, the Community team produces a “bugs & feedback snapshot” on a weekly basis to keep the community informed of the most voted issues.
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