Federal Reserve Chair Janet Yellen, facing tough questions from U.S. lawmakers this week on health of the U.S. economy and the timing of the first Fed rate hike, will be under pressure to acknowledge an uptick in inflation and improvement in the labor market.
Such an admission would mark a significant shift in tone towards a more hawkish rates outlook, a development which would help buoy the U.S. dollar or at least help put a floor in the currency, strategists told CNBC.
"I think it is too soon to expect a less dovish tone from her," said Jens Nordvig, global head of G10 FX strategy at Nomura. "Eventually the tone from the FOMC (Federal Open Market Committee) will shift, but I think September-October is the more likely timing."
Yellen delivers her closely-watched semi-annual monetary policy testimony to the Senate Banking Committee on Tuesday and to the House Committee on Financial Services on Wednesday.
Exactly what tone Yellen will strike during the testimony is dividing currency analysts.