* Markets await Bernanke testimony
* Bernanke discusses exit strategy in WSJ article
* Caterpillar posts strong Q2 earnings
* Sterling underperforms; Bank of Canada holds rates steady (Recasts, updates prices, adds quotes, changes byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, July 21 (Reuters) - The U.S. dollar fell to fresh six-week lows against the euro and a basket of currencies on Tuesday, pressured by second-quarter U.S. corporate earnings that continued to beat expectations.
But the dollar's losses were limited ahead of Federal Reserve chairman Ben Bernanke's congressional testimony. Bernanke will testify on the economic outlook and monetary policy before the House Financial Services Committee at 10 a.m. (1400 GMT).
Analysts expect Bernanke to provide more details on possible exit strategies from the bank's quantitative easing, especially after he wrote a Wall Street Journal article on the same subject.
In the run-up to Bernanke's speech, investor appetite for risk was still evident in equity markets especially after Tuesday's generally strong earnings. Caterpillar, for instance, posted a second-quarter profit and gave an upbeat earnings outlook for 2009.
"Markets were once again reacting to strong U.S. earnings, I would say though that the earnings beats were the slightest of margins," said Jacob Oubina, senior currency strategist, at Forex.com in Bedminster
"But the most important thing today is Ben Bernnake's testimony and any color he gives on exit strategies."
Bernanke highlighted in the WSJ article on Tuesday that the central bank has a strategy for removing its accommodative measures once a recovery takes hold. He wrote that the huge amounts of money pumped into the economy will not constrain the Fed's ability to push borrowing costs higher when the time comes.
"Today's editorial by the Fed Chairman has provided a convenient short-covering opportunity for dollar bears which can continue for the rest of the day," said Boris Schlossberg, director of GFT in New York.
But he said the dollar's rally in the wake of Bernanke's article was much more pronounced against the pound more than the euro.
In early New York trading, the ICE futures' dollar index fell to 78.591, its lowest since early June. It was last at 78.604, down 0.4 percent on the day.
The euro rose to new six-week highs at $1.4277, according to Reuters data, and was last at $1.4267, up 0.3 percent.
Sterling underperformed, trading down 0.8 percent at $1.6470 after public finances data showed the worst June performance on record, with net debt standing at 56.6 percent of gross domestic product, the highest since records began in 1974.
The U.S. dollar fell against the Canadian dollar to C$1.0982, down 0.5 percent, after the Bank of Canada left interest rates at a historic low of 0.25 percent and gave an upbeat economic forecast. (Editing by Theodore d'Afflisio)