The dollar dipped against a currency basket on Tuesday as investors awaited Federal Reserve Chairman Jerome Powell’s first congressional testimony later in the day.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, edged down 0.13% to 89.66 by 03:09 AM ET (08:09 AM GMT).
Investors were awaiting Powell’s congressional testimony later Tuesday, his first appearance on Capitol Hill since he was sworn in as the new Fed chief earlier this month.
Any indications the Fed is leaning towards raising interest rates at a faster than expected pace this year could determine whether the dollar’s recovery from recent three year lows still has further to go.
The dollar index climbed 0.9% last week, extending its recovery after hitting a three year low of 88.15 on February 16.
The dollar was boosted by the view that the selloff in the currency since the start of the year had been overdone and by expectations for faster hikes in U.S. interest rates.
Investors were also looking ahead to a raft of U.S. economic data this week, including reports on consumer confidence, revised fourth-quarter growth, manufacturing and personal income and spending.
The dollar edged higher against the yen, with USD/JPY inching up 0.11% to 107.04.
The euro pushed higher, with EUR/USD rising 0.18% to 1.2339, but gains were held in check as investors remained cautious ahead of the Italian general election due to be held on March 4.
The pound was a touch higher against the softer dollar, with GBP/USD edging up 0.12% to 1.3985.
The Australian dollar was little changed, with AUD/USD at 0.7852 while the New Zealand dollar slipped lower, with NZD/USD down 0.15% to 0.7291.