Investing.com - The dollar was trading at three-and-a-half week highs against a basket of the other major currencies on Wednesday after Federal Reserve Chair Janet Yellen said the bank is on course to raise interest rates.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.16% at 101.36, the most since January 11.
In testimony to the U.S. Senate on Tuesday, Yellen said a rate increase would be appropriate at one of the Fed’s forthcoming meetings if the economy evolves in line with expectations.
She added that waiting too long to remove monetary policy accommodation would be unwise. The Fed has indicated that it could hike rates three times this year.
She also said changes to fiscal policy under the Trump administration could affect the economic outlook, but it was too early to know how this would unfold.
Yellen was due to appear before the House Financial Services Committee later Wednesday.
According to Investing.com's Fed Rate Monitor Tool less than 20% 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 dollar was at two-and-a-half week highs against the yen, with USD/JPY up 0.25% at 114.53.
The euro was weaker, with EUR/USD down 0.2% at 1.0556.
The single currency remained under pressure amid concerns over Greece’s bailout negotiations and the possibility of a Brexit or Trump-style shock result in France’s upcoming presidential election.
Sterling edged lower, with GBP/USD dipping 0.1% to 1.2455 ahead of the latest UK employment report, which will show if wage growth is keeping pace with inflation.
Investors were also looking ahead to the latest batch of U.S. economic reports later in the day, including figures on consumer price inflation and retail sales.