The U.S. dollar climbed against its major counterparts in the Asian session on Wednesday, after Federal Reserve Chairman Jerome Powell gave a positive outlook of the U.S. economy in his testimony before the Senate Banking Committee and reiterated that gradually raising interest rates is "the best way forward."
The U.S. economy has grown at a solid pace so far this year, Powell said, adding that recent inflation data has been "encouraging" and consumer price inflation moved a little above the central bank's 2 percent target.
"Looking ahead, my colleagues on the FOMC and I expect that, with appropriate monetary policy, the job market will remain strong and inflation will stay near 2 percent over the next several years," Powell said.
With the strong job market, inflation close to the objective, and the risks to the outlook roughly balanced, Powell said the Fed believes gradually raising interest rates is "the best way forward."
Powell's comments underscored the likelihood of another rate hike in September and one more time later in the year.
The greenback appreciated to 1.3242 against the loonie, its strongest since June 29. The greenback is seen finding resistance around the 1.34 level.
The greenback advanced to 5-day highs of 1.0028 against the Swiss franc and 1.1625 against the euro, reversing from its early lows of 0.9996 and 1.1665, respectively. The next possible resistance for the greenback is seen around 1.02 against the Swiss franc and 1.15 against the euro.
The U.S. currency reversed from an early low of 1.3117 against the pound, rising to 1.3080. If the greenback extends rise, 1.29 is likely seen as its next resistance level.
The greenback climbed to a 5-day high to 0.6749 against the kiwi and more than a 2-week high of 0.7347 against the aussie, from its early lows of and 0.7395,respectively. On the upside, 0.66 and 0.72 are likely seen as the next resistance levels for the greenback against the kiwi and the aussie, respectively.
The greenback firmed to 113.14 against the yen, a level not seen since January 9. Continuation of the greenback's uptrend may see it challenging resistance around the 114.00 level.
Looking ahead, U.K. house price index for May, CPI and PPI for June, Eurozone final CPI for June and construction output for May are due in the European session.
In the New York session, U.S. housing starts and building permits for June are scheduled for release.
At 10:00 am ET, Federal Reserve Chairman Jerome Powell will testify on the Semiannual Monetary Policy Report before the House Financial Services Committee in Washington DC.