The dollar fell against a basket of currencies on Wednesday as traders trimmed their greenback holdings following Federal Reserve Chair Janet Yellen's suggestion that the U.S. central bank would not rush into raising interest rates.
The drop in the dollar mirrored a pullback in yields on shorter-dated U.S. Treasuries from recent highs, as Yellen's testimony to U.S. lawmakers disappointed investors who had positioned themselves for a clearer signal whether rates might rise as early as mid-year.
The two-year U.S. Treasury note yield touched a two-week low on Tuesday partly on Yellen's perceived dovish comments.
Yellen declined to provide much insight into when the word "patient" might be dropped from the Fed's policy statement and instead emphasized that dropping the word would not necessarily portend rate hikes were imminent.
Whether to raise rates will depend on economic data and will be decided on a meeting-to-meeting basis, she said.