The dollar, while mostly weaker Tuesday morning, has firmed in recent sessions on comments from St. Louis Fed President James Bullard and others who said the Fed could consider a rate hike in April.
"The risks are if anything that she's going to offset some of the more hawkish rhetoric we've seen," said Ian Lyngen, senior Treasury strategist at CRT Capital. Lyngen expects Yellen to reiterate the recent FOMC statement, and she could sound dovish in the process. But he expects no new proclamation from the Fed chair.
"Some people call her the fairy godmother...she seems to have a knack of making the markets go higher," said Randy Frederick, managing director, trading and derivatives at Charles Schwab. Frederick said Yellen was more consistently positive for stocks earlier in her tenure but she could be positive for the market Tuesday.
"She likes to talk dovish and the markets seems to love it," he said.
Treasury yields were lower in early Tuesday trading, as oil futures weakened.
Even though Yellen is not expected to make news, Fed watchers are looking for some clarity.
"All the FOMC members seem to be swinging back and forth in their sentiment, probably reflecting market conditions," said Mark Zandi, chief economist at Moody's Analytics. "Bottom line the economy is strong and it's rapidly approaching full employment, and inflation is much more likely to be heading north than south."
But Monday's economic data raised questions about the strength of the economy and whether it can endure rate hikes. Economists trimmed first-quarter GDP forecasts after a downward revision to January's consumption data and a wider trade gap. The median first-quarter growth tracking estimate was sliced by a sharp half percent to 0.9 percent, according to the CNBC/Moody's Analytics rapid update of economists' estimates.
"She has to acknowledge that the economic growth is more uneven than the Fed would like," said Diane Swonk, founder and CEO of DS Economics. "The hawkishness existed obviously at the meeting as well or we would not have gotten the dissent." Kansas City Fed President Esther George dissented at the March gathering. The Fed also issued new forecasts that day, including an interest rate projection that showed two hikes in 2016, revised down from four.