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By Michael Connor
NEW YORK (Reuters) - The dollar inched up against the Japanese yen on Monday but was little changed against other major currencies as investors awaited congressional testimony by Federal Reserve Chair Janet Yellen on U.S. monetary policy.
The dollar was up 0.2 percent against the yen at 101.58.
"There's a little backing up of U.S. yields (along with) the rise in the stock market are helping give the dollar a little bit of a firmer tone against the yen," said Marc Chandler, global head of market strategy at Brown Brothers Harriman & Co in New York.The euro also rose 0.25 percent against the yen, to 138.26 yen, recovering from last week's five-month low of 137.50 yen.
The euro, which has been trading steadily against the dollar at around $1.36, was nearly unchanged at $1.3611 after European Central Bank President Mario Draghi cautioned lawmakers that a strong euro could drag on a euro zone economic recovery.
The U.S. dollar index of six currency trading pairs was up slightly at 80.202 as U.S. Treasury yields perked up. Benchmark 10-year Treasuries were down 8/32 in price to yield 2.5468 percent.
U.S. stocks were up smartly, with the Standard & Poor's 500 index of leading American corporations gaining 0.50 percent.
U.S. Treasury yields have mostly declined in recent weeks and Fed Funds futures show investors are pushing back policy tightening expectations following Fed minutes released last week that suggested the central bank was in no rush to hike rates.
Much will depend on what Yellen says during congressional appearances set for Tuesday and Wednesday, particularly since U.S. data in the second quarter has signalled a strengthening economy.
"The key is U.S. yields, and if they are not moving higher, it's unlikely to translate into anything substantial for the dollar," Commerzbank currency strategist Peter Kinsella said.
Trading volumes were especially low, according to Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.
"There's a lot of apathy," Borthwick said. "Volatility is low and nothing - not Ukraine, Banco Espirito Santo - seems to be enough for people to take big positions. Yellen will move the market for five minutes, and that will be all."
Currency traders are also looking for clues on macroeconomic trends and will focus on the Empire State Manufacturing Survey on Tuesday and Philadelphia Fed Survey on Thursday, Chandler said.
"The Empire State and the Philly Fed surveys will give us our first read of the third quarter. That will be more important than confirming a strong second quarter," he said.
(Additional reporting by Jemima Kelly and Anirban Nag in London; Editing by Peter Galloway and Meredith Mazzilli)