The U.S. dollar advanced against other major currencies in the Asian session on Thursday in response to comments from Federal Reserve Chairman Ben Bernake indicating a withdrawal of asset purchase program earlier than expected.
In his testimony before the Joint Economic Committee of Congress yesterday, Bernanke downplayed speculation that the central bank is planning to taper its $85 billion monthly bond buying program.
"A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further," Bernanke told lawmakers.
However, Bernake told that policy makers are ready to scale back the QE3 program if presented with data showing sustainable improvement in the labor market.
"The key to this program is the data," Bernanke said. The greenback reached as high as 103.56 against the yen, closer to 4-1/2-year high of 103.73 set on Wednesday.
The greenback advanced to a 3-day high of 1.2823 against the euro area currency, reversing from yesterday's multi-day low of 1.2997.
The greenback may find resistance around 1.27 level. The greenback approached 1.5013 against the pound, a level not seen since March 14. On the upside, 1.49 is seen as the next resistance level for the greenback.
The U.S. currency rose to 0.9817 against the franc, not far from its 9-1/2-month high of 0.9838 hit yesterday.
Further upside extension of the greenback-franc pair may help it to find resistance around 0.99 area.
The greenback spiked up to 1.0392 against the loonie for the first time since June 2012.
If the greenback extends uptrend, its next resistance lies around 1.045 level.
At Wednesday's close, the pair traded at 1.0367.
The greenback strengthened to near a 1-year high of 0.9627 against the Australian dollar and an 8-1/2-month high of 0.8025 against the NZ dollar.
The next resistance level for the greenback lies around 0.94 against the aussie and 0.79 against the kiwi.
Looking ahead, PMIs from major European economies, second estimate of U.K. first quarter GDP data and Eurozone flash consumer sentiment index for May are scheduled for release in the European session.
The U.S. weekly jobless claims for the week ended May 18, new home sales for April and house price index for March are due in the New York session.
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