The euro was wallowing at one-month lows against the dollar on Wednesday and the yen was at one week lows after Federal Reserve Chairwoman Janet Yellen indicated that rates could rise sooner than expected if the economy continues to improve.
EUR/USD was at 1.3557, the weakest since June 18, down slightly from 1.3566 late Tuesday.
The pair was likely to find support at 1.3525 and resistance at 1.3600.
The dollar strengthened after Ms. Yellen said interest rates could rise sooner more quickly if the labor market was to improve more quickly than expected. However, the Fed chair also said that if the economic recovery disappoints monetary policy would remain accommodative.
The remarks came during testimony to the Senate Banking Committee in Washington.
Ms. Yellen said the economy is continuing to improve but added that the recovery is not yet complete and reiterated that rates are likely to remain on hold for a considerable period after the bank’s quantitative easing program ends.
USD/JPY was steady at 101.68, close to Tuesday’s one week highs of 101.74.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was at 80.47, the highest since July 2.
Elsewhere, EUR/JPY dipped 0.05% to 137.92, not far from the five month lows of 137.48 struck on July 10.