Written by Brigid Riley
TOKYO (Reuters) – The U.S. dollar was mostly stable on Wednesday as traders avoided big bets ahead of Federal Reserve Chair Jerome Powell's testimony to Congress, the European Central Bank interest rate decision later this week and the U.S. jobs report. Was.
Among cryptocurrencies, Bitcoin regained momentum but fell below its all-time high in volatile overnight trading.
The dollar fell overnight on data showing growth in the U.S. services industry slowed slightly last month, but a lack of catalysts kept it within a narrow range.
February's U.S. jobs report, to be released on Friday, will be a test of the outlook for interest rates, and a surprise increase in employment could destabilize the market.
Traders are also awaiting Fed Chair Jerome Powell's first day of testimony to Congress on the state of the U.S. economy, with him expected to reinforce that the central bank will wait for more data before cutting rates.
Commonwealth Bank of Australia currency strategist Carol Conn said the Fed chief could echo comments that strong core inflation in January did not significantly change the central bank's outlook.
“Reiterating this message is unlikely to change the current market pricing of the FOMC's rate cutting cycle starting in June, so the impact on the USD will be limited.”
According to the CME FedWatch tool, the market has priced in a roughly 60% chance of a June rate cut.
The dollar index, which measures the dollar's strength against a basket of six currencies, is hovering 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 keep interest rates on hold at a record high of 4%, with focus on clues about when it will begin cutting rates and updates on the economic outlook.
Charu Chanana, head of currency strategy at Saxo, said he did not expect the ECB to send a clear dovish message after euro zone inflation fell less than expected last month. .
“Still, inflation is likely to be revised downwards, which poses some downside risk to the euro, but given the economy is stabilizing, it remains a bull buy.”
Business activity in the euro zone showed signs of recovery in February, according to a survey on Tuesday.
Sterling stabilized at $1.27050 ahead of Wednesday's UK budget announcement.
The Australian dollar rebounded in the afternoon in Asia, defying gross domestic product data that showed the economy grew just 0.2% in the fourth quarter and strengthening the case for a rate cut. It was last up 0.24% at $0.65195.
The Kiwi rose 0.16% to $0.60960 after hitting a three-week low of $0.6070 in early trading.
The dollar fell 0.12% against the Japanese yen to 149.86 yen, after falling to 149.70 yen overnight.
Although locked in a narrow range, the Japanese currency remains below last week's low of $150.85 against the US dollar.
Markets are also focused on Bitcoin, the world's largest cryptocurrency, which soared to record highs overnight before falling sharply.
It was last up 4.11% at $65,921. Bitcoin has rallied sharply since October as investors poured money into physically traded crypto products in the US and on expectations that global interest rates could fall.
(Reporting by Brigid Riley; Editing by Sri Navaratnam and Lincoln Feast)
