The euro was 0.06% lower against the dollar at $1.08495. Most major currency pairs, however, traded in familiar ranges.
“The G10 FX world remains incredibly subdued,” said Michael Brown, market analyst at online broker Pepperstone in London.
“There’s some reluctance from most market participants to trade with conviction ahead of Powell tomorrow, ECB on Thursday, and of course NFP (nonfarm payrolls) on Friday, which is probably exacerbating the quiet conditions at the start of the week,” he said.
The dollar index, which measures the buck’s strength against a basket of six currencies, is up about 2.4% for the year, lifted by better than expected U.S. economic data, but the currency’s rally has stalled in recent sessions, as investors await clarity on Fed policy.
Chair Powell is likely to reinforce the message that the Fed wants to wait for more data before any rate cuts when he testifies to Congress about inflation and the economy on Wednesday and Thursday.
“We should expect Fed Chair Powell to reiterate patience and emphasize (there is) no hurry to cut rates,” said Christopher Wong, currency strategist at OCBC in Singapore.
The ECB meets to discuss policy on Thursday but is widely expected to leave interest rates at a record 4%. Investors will be on the lookout for any hints about when rates might start to fall and will scrutinise updated economic projections.
Survey data on Tuesday showed that business activity in the euro zone showed signs of recovery last month.
U.S. employment figures for February have the potential to rock markets on Friday. Economists expect hiring slowed last month but a bigger-than-expected number could add to the dollar’s rise this year.
News out of China’s National People’s Congress contained few surprises, with Beijing sticking with a economic growth target of 5% and a budget deficit of 3%. Analysts at Nomura said the growth target will be challenging to meet without more stimulus.
The offshore yuan was little changed at $7.2105.
The dollar slipped 0.35% against the yen to 150.01, retreating further from last week’s high of 150.85.
A break higher would open the way to November’s top at 151.92, but would also run the risk of provoking Japanese intervention.
Sterling rose 0.04% to $1.2695 ahead of the British budget on Wednesday. Finance Minister Jeremy Hunt has been trying to dampen speculation about big pre-election tax cuts.
Bitcoin traded little changed on the day at $67,398, having surged to $68,828 in Asian trading hours, just shy of the record peak of $68,999.99 it touched in November 2021.
The largest cryptocurrency by market value is up nearly 60% this year, benefiting from flows into exchange-traded funds launched in the United States.
