2013.05.2107:25:48UTC+00Dollar resumes rise against yen

The dollar rose against the yen on Tuesday after a Japanese minister clarified remarks about the yen's drop, but many awaited the Federal Reserve chief's testimony before adding to bets on a stronger U.S. currency.

Speculation the Fed will trim its bond purchases sooner than expected has mounted given signs of an improvement in the U.S. labor market. Chairman Ben Bernanke testifies to Congress on Wednesday and his words will be combed for clues on the timing.

If Bernanke reiterates his ultra-loose monetary policy stance, the dollar could give up some of its gains against most major currencies. However, any hint asset purchases could be wound down later this year would give the dollar index, which has risen 5 percent this year, a huge boost, traders said.

The index, which measures the dollar against a basket of six currencies, was up 0.12 percent at 83.839, not far from Friday's peak of 84.371, its highest since July 2010.

The dollar rose against the yen on Tuesday after a Japanese minister clarified remarks about the yen's drop, but many awaited the Federal Reserve chief's testimony before adding to bets on a stronger U.S. currency.

Speculation the Fed will trim its bond purchases sooner than expected has mounted given signs of an improvement in the U.S. labor market. Chairman Ben Bernanke testifies to Congress on Wednesday and his words will be combed for clues on the timing.

If Bernanke reiterates his ultra-loose monetary policy stance, the dollar could give up some of its gains against most major currencies. However, any hint asset purchases could be wound down later this year would give the dollar index, which has risen 5 percent this year, a huge boost, traders said.

The index, which measures the dollar against a basket of six currencies, was up 0.12 percent at 83.839, not far from Friday's peak of 84.371, its highest since July 2010.

The euro was flat at $1.2890, with gains likely to be checked around $1.2910 by expectations the European Central Bank will lower its deposit rate to below zero.