© Reuters. FILE PHOTO: Representations of cryptocurrency Bitcoin and U.S. dollar are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
By Brigid Riley
TOKYO (Reuters) -The U.S. dollar was largely steady on Wednesday, as traders avoided making big bets ahead of congressional testimony from Federal Reserve Chair Jerome Powell, as well as a European Central Bank rate decision and U.S. jobs data later this week.
In cryptocurrencies, bitcoin was picking up momentum again, although it stayed below a record high reached in a volatile overnight session.
The absence of catalysts kept the dollar in a tight range, having slipped overnight on data showing the U.S. services industry growth slowed a bit last month.
The February U.S. jobs report on Friday stands as a test for the rates outlook, with the potential to rock markets if employment surprises to the upside.
Traders were also waiting on Fed Chair Powell’s first day of testimony before Congress on the state of the U.S. economy, where he’s expected to reinforce the Fed will wait for more data before making any rate cuts.
The Fed chief may also echo comments that strong core inflation in January hasn’t significantly changed the central bank’s outlook, said Carol Kong, a currency strategist at the Commonwealth Bank of Australia (OTC:).
“A reiteration of this message is unlikely to alter current market pricing for a June start to the FOMC’s rate cut cycle, and should therefore have limited impact on the USD.”
Markets have priced in about a 60% chance of a rate cut in June, according to the CME FedWatch tool.
The , which measures the greenback’s strength against a basket of six currencies, hovered around 103.76.
The euro was flat at $1.0855 as traders braced for the ECB’s interest rate decision later on Thursday.
The central bank is expected to leave rates at a record 4%, putting the focus on clues about when cuts may begin and updates to economic projections.
Charu Chanana, head of currency strategy at Saxo, said she doesn’t expect the ECB to send a clear dovish message given that eurozone inflation dipped less than expected last month.
“Still, inflation prints are likely to be revised downwards, and this poses some downside risks for EUR, but it will remain a buy on dips given that the economy is stabilizing.”
Business activity in the euro zone showed signs of recovery in February, according to a survey on Tuesday.
Sterling held steady at $1.27050 ahead of the British budget announcement on Wednesday.
The Australian dollar recovered in the Asian afternoon, brushing off gross domestic product data that showed the economy grew a mere 0.2% in the fourth quarter, reinforcing the case for rate cuts. The currency was last up 0.24% at $0.65195.
The gained 0.16% at $0.60960, after touching a three-week low of $0.6070 earlier in the session.
The dollar gave up 0.12% against the yen to stand at 149.86, after retreating overnight as low as 149.70.
Although pinned in a tight range, the Japanese currency has remained below last week’s low against the greenback of 150.85.
Markets are also keeping a close eye on the world’s largest cryptocurrency, bitcoin, after it surged to a record high overnight before retreating sharply.
It was last up 4.11% at $65,921. has rallied hard since October as investors poured money into U.S. spot exchange-traded crypto products and on the prospect that global interest rates may fall.
