"I think the dollar is very close to its peak value for the time being. Even if they do raise rates, they're going to communicate it's one and done for the time being," said Schlossberg. He said he expects the euro to reach parity with the dollar but it could take a while and the U.S. economy will have to see a pickup.
Yellen is being watched carefully because some traders worry the Fed is hiking rates before the economy is strong enough. Weak ISM manufacturing data that showed contraction spooked the bond market Tuesday.
John Briggs, RBS head of strategy said Yellen on Wednesday was less negative about the influence of international developments and China on the U.S. economy. She was also more confident that inflation would move back to target, and she described risks as "very close" to being balanced.
"I think she reaffirmed the sense they are on track to start raising rates in December," he said, adding he expects more of the same in her testimony before the Joint Economic Committee Thursday.
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Besides Yellen's comments, there are comments from Cleveland Fed President Loretta Mester and Fed Vice Chairman Stanley Fischer, who speak on financial stability, at 1:10 p.m. in Cleveland.
ECB President Mario Draghi will speak at 8:30 a.m. ET, after the ECB release.
ISM nonmanufacturing data at 10a.m. will be important since ISM manufacturing data showed contraction in the sector. Jobless claims are released at 8:30 a.m. and factory orders are at 10 a.m.
The dollar index is seen as a limited metric since it is heavily influenced by the euro, and analysts expect the dollar's big move could be against emerging markets and other currencies,which are not included in the index.
The dollar index represents a calculation of six currencies against the dollar, including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. Prior to the creation of the euro, the index included the German mark, French franc, Italian lira, Dutch guilder and the Belgian franc.