Investing.com - The U.S. dollar slid lower against a basket of the other major currencies on Tuesday as markets awaited testimony from Federal Reserve Chair Janet Yellen later in the trading day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.28% to 100.73, pulling back from Monday’s high of 101.11, the most since January 11.
Yellen will present the Fed’s report on monetary policy and the economy in testimony to the U.S. Senate on Tuesday and the House on Wednesday and investors will be watching her comments for clues on when the U.S. central bank could raise interest rates next.
According to Investing.com's Fed Rate Monitor Tool less than 15% of traders expect the Fed to raise interest rates at its next meeting in March. The chance of a June increase is seen at just below 50%.
The Fed, which last hiked rates in December, has forecast three rate hikes this year.
The dollar came under additional selling pressure after President Donald Trump's national security adviser Michael Flynn resigned late Monday amid allegations that he discussed the possibility of lifting sanctions with Russia before Trump took office.
Demand for the dollar had been boosted in recent sessions after recent remarks from Trump indicated that his administration would soon reform tax policy.
The dollar weakened against the yen, with USD/JPY down 0.2% to 113.49.
Japanese Prime Minister Shinzo Abe said Tuesday that he agreed with Donald Trump at a weekend summit that currency issues would be best left for finance leaders of each country to discuss.
The euro pushed higher, with EUR/USD rising 0.26% to 1.0627.
Markets were watching events in Greece as efforts continued to reach a deal on its next bailout payment before February 20th.
The single currency also remained under pressure amid fears over the possibility of a Brexit or Trump-style shock result in France’s upcoming presidential election.
Meanwhile, sterling was slightly higher, with GBP/USD edging up 0.1% to 1.2536 ahead of UK inflation data which was expected to show another jump in the cost of living.