The dollar was marginally higher ahead of Powell's testimony to Congress where he is expected to push a hawkish tone. Meanwhile, the pound declined following hotter-than-expected UK inflation data showing the rate remained persistent at 8.7% in May.
Sterling initially rose but then fell up to 0.56% against the dollar as the inflation figures weighed. Analysts said the weakness reflected concerns high inflation could hamper the pound.
Investors are watching for signs from Powell on whether the Fed will pursue another 50 basis point rate hike in 2023 to fight inflation. A hawkish stance could boost the dollar and yields.
The dollar index was up slightly at 102.58. The yen declined after the Bank of Japan governor reiterated a dovish stance. The euro was little changed.
The yuan and Aussie dollar showed limited upside with China's sluggish recovery and lack of stimulus weighing. The offshore yuan broke below 7.2 per dollar while the Aussie fell to $0.676 following less hawkish RBA minutes.
Bitcoin extended gains, breaching $29,000 helped by the launch of a new crypto exchange.
