The US dollar sagged and US bond yields fell Tuesday ahead of two days of testimony to Congress on the economy by Federal Reserve Chairman Ben Bernanke.
The pullback came amid speculation on whether Bernanke would confirm the Fed's path toward trimming back its $85 billion-a-month QE bond purchases later this year or signal that economic growth needs more strength before that happens.
At 2100 GMT, the euro was at $1.3164, compared to $1.3064 late Monday.
The dollar also fell to 99.04 yen from 99.82, while the euro was barely changed at 130.43 yen.
Bernanke will speak to the House of Representatives Financial Services Committee Wednesday morning, with the state of US economic growth and the Fed's five-year-old easy-money policy -- and its plan for interest rates -- the key topic.
Bernanke has strained to explain in recent weeks that even if the Fed begins reeling in the quantitative-easing program, it does not mean that interest rates will be increased and monetary policy will be tightened before 2015.
But markets have shown their doubts, with bond yields and interest rates climbing sharply since May in expectation of tightening.
Currency analyst David Song at DailyFX said he expects a confirmation of the plan to begin exiting QE, which could strengthen demand for the greenback.
"The growing discussion at the Federal Reserve to taper the asset-purchase program may prompt US lawmakers to press Mr. Bernanke," he said.
"Any potential comments surrounding the timing and the pace of the exit should prop up the reserve currency as the (Fed) appears to be slowly moving away from its easing cycle."
The pound pushed higher, to $1.5155 from $1.5100, while the dollar fell to 0.9391 Swiss franc from 0.9480.