The dollar rose on Wednesday but hovered near a three-week low after Federal Reserve Chairman Jerome Powell struck a cautious tone.
On the first day of his testimony before Congress last night, Powell said that a rate cut would not be appropriate until the Fed gains greater confidence that inflation is moving toward its 2% target.
The dollar index, which measures the greenback against six major currencies including the euro and the yen, was steady at 105.09, after rising about 0.1% on Tuesday. It had fallen on Monday to its lowest level since June 13 after unexpectedly weak U.S. jobs data.
Traders now see about a 73 percent chance of a rate cut by September, down from 76 percent the day before. Expectations are for another cut most likely by December.
After his Senate testimony, Powell will speak before the House of Representatives later on Wednesday.
The Australian dollar fell 0.1 percent to $0.67345 but was still hovering near a six-month high of $0.67615 hit on Monday.
The euro was steady at $1.0820, close to a nearly one-month high of $1.0845 touched on Monday, as traders braced for political deadlock in France following the country's surprise victory by the country's left-wing coalition.
The single currency came under pressure last month after early elections were called in France but has since recouped some of those losses, although investors remain cautious about the potential political impasse.
The dollar rose 0.07 percent to 161.43 yen, while the two currencies traded in a narrow range ahead of a Bank of Japan meeting scheduled for the end of the month.
The Bank of Japan is likely to cut its economic growth forecast for this year in July, sources told Reuters, but inflation is expected to remain around its 2 percent target in the coming years, keeping open the possibility of a rate hike this month.
