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Dollar Stays Near 3-week High Ahead Of Powell's Testimony

The U.S. dollar stayed firm against most major currencies on Tuesday as traders awaited the testimony of Fed Chairman Jerome Powell before the U.S. Congress on Wednesday and Thursday.

Investors expect Powell's testimony to provide some clues about the central bank's outlook for interest rates.

Till the release of the jobs data for the month of June on Friday, markets were speculating that the central bank will likely cut interest rate by a steep 50 basis points in July and this resulted in the greenback losing shine against most of its rivals.

However, with the data turning out to be fairly buoyant, optimism about a steep cut in interest rate faded and the dollar has been gaining some ground.

The dollar index, which rose to 97.59, remained fairly steady subsequently, moving between 97.45 and 97.52.

Against the euro, the dollar strengthened to 1.1195 before paring some gains. Still, at $1.1208 a unit of euro, it was up 0.07% from previous close.

The pound sterling was down more than 0.4% against the dollar with a unit of sterling fetching $1.2465, compared to $1.2518 late Monday.

The dollar was up against the yen as well. At 108.88 yen a dollar, the yen was down 0.14% from previous close of 108.72 yen a dollar.

The Aussie was down more than 0.6% against the dollar, with the AUD-USD pair trading at 0.6926.

The dollar was up 0.25% against the loonie at 1.3128, while it was down marginally against Swiss franc at 0.9936.

Powell is scheduled to testify before the House Financial Services Committee on Wednesday and before the Senate Banking Committee on Thursday.

Traders are likely to closely analyze Powell's comments for clues about the outlook for rates.

The minutes of the Fed's last monetary policy meeting will also be out on Wednesday. The minutes may shed additional light on the central bank's decision to make notable changes to its accompanying statement.

The statement said the Fed continues to see a sustained economic expansion, a strong labor market, and inflation near its 2% target as the most likely outcomes but noted uncertainties about this outlook have increased.

"In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion," the Fed said.

Notably, the Fed omitted its reference to remaining "patient" when determining future changes to interest rates.

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