The dollar fell to a three-week low in choppy trading on Tuesday as Federal Reserve Chairman Jerome Powell repeated that the US central bank would remain patient on monetary policy, suggesting that it was unlikely to raise interest rates anytime soon. The dollar initially inched higher as Powell stayed on script at a US Senate Banking Committee hearing on Tuesday, but it slipped in his question-and-answer session with US senators.
In prepared testimony released in advance of two days of hearings on Capitol Hill, Powell said the Fed would remain "patient" in deciding on further interest rate hikes, reaffirming the policy shift made by the central bank in January.
The greenback's earlier advance was also helped by news of a jump in US consumer confidence, which came as Powell spoke.
"The basic message that Powell is sending is that the Fed needs to be cautious. At this point, the Fed seems to be suggesting that there are doubts on the economy," said Juan Perez, senior currency trader at Tempus Inc in Washington.
Money markets have ruled out any more rate hikes for the remainder of the year with an 80 percent probability of a rate cut by January 2020.
Shortly after midday, the dollar index, a measure of its value against a basket of other currencies, fell 0.2 percent at 96.206, after hitting a three-week trough of 96.151.
The euro rose 0.2 percent versus the dollar to $1.1377, while the greenback slid 0.3 percent against the Japanese yen to 100.73.
The pound was last up 1.3 percent at $1.3260.
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