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U.S. Dollar Falls Ahead Of Powell's Testimony

The U.S. dollar declined against its most major counterparts in early European deals on Wednesday, as investors await testimony by Federal Reserve Chairman Jerome Powell and the release of Federal Reserve's minutes from the June meeting for more hints about possibility of a rate cut later this month.

Powell will appear before the House Financial Services Committee later in the day, when he will be quizzed about the Fed's policy direction.

Investors keenly await signals about near term monetary easing against the backdrop of slowing economic activity and increased risks to outlook.

The FOMC will release the minutes from the June 18-19 meeting at 2:00 pm ET.

At the meeting, the Fed opened the door for rate cuts by removing the description of its rate policy as patient.

The Fed next meets on July 30-31 and futures markets are widely expecting a rate cut of 25 basis points.

The U.S. wholesale inventories for May will be released at 10:00 am ET.

The currency held steady against its major counterparts in the Asian session, excepting the yen.

The greenback declined to 1.2494 against the pound, from a high of 1.2444 hit at 2:15 am ET. The next possible support for the greenback is seen around the 1.26 level.

Data from the Office for National Statistics showed that UK gross domestic product grew in the month of May after a decline in April.

GDP rose 0.3 percent month-on-month in May following a 0.4 percent decline in April. The expansion was in line with economists' expectations.

The greenback fell to a 2-day low of 1.1230 against the euro, after rising to 1.1202 at 8:30 pm ET. The greenback is seen finding support around the 1.14 region.

The greenback that closed Tuesday's trading at 0.9935 against the franc dropped to a 2-day low of 0.9909. On the downside, 0.97 is possibly seen as the next support level for the greenback.

The greenback eased to 0.6608 against the kiwi, from near a 3-week high of 0.6565 touched at 10:00 pm ET. If the greenback extends decline, 0.68 is possibly seen as its next support level.

The U.S. currency reversed from its early high of 1.3120 against the loonie and near a 3-week high of 0.6910 against the aussie, retreating to 1.3138 and 0.6929, respectively. The greenback is likely to find support around 1.30 against the loonie and 0.715 against the aussie.

In contrast, the greenback held steady against the yen, fluctuating in the upper 108 range during the European session. This follows a 1-1/2-month high of 108.99 set at 8:45 pm ET. At yesterday's close, the pair was worth 108.85.

Data from the Bank of Japan showed that Japan producer prices fell 0.5 percent on month in June.

That missed expectations for a monthly decline of 0.1 percent, which would have been unchanged from the May reading.

Looking ahead, the Bank of Canada announces its interest rate decision at 10:00 at am ET. Economists widely expect the benchmark rate to remain at 1.75 percent.

At the same time, Federal Reserve Chairman Jerome Powell is set to testify on the Semiannual Monetary Policy Report before the House Financial Services Committee in Washington DC.

The U.S. wholesale inventories for May and the Federal Reserve's minutes from the June meeting are scheduled for release in the New York session.

At 1:30 am ET, Federal Reserve Bank of St. Louis President James Bullard will deliver a speech at the Official Monetary and Financial Institutions Forum Meeting in St. Louis.

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