The market initially read Bernanke's comments as dovish, which drove the dollar and bond yields lower and sent equities higher. But the dollar rebounded as a reduction of Fed stimulus remains on the agenda this year, analysts said.
"Today's testimony reiterates as long as the economy remains on (its) current course for modest expansion, an autumn tapering of purchases would eventually lead to the termination of purchases by next year," said Ashraf Laidi, chief global strategist at City Index Ltd. in London.
The dollar index, which tracks the greenback's performance against a basket of major currencies, rose 0.2 percent to 82.655, bouncing back after hitting a three-week low of 82.342. The index is straddling its 100-day moving average.
Earlier on Wednesday, data showed U.S. housing starts and permits for future home construction fell unexpectedly in June, but the decline in activity was seen as likely to be short-lived against the backdrop of bullish sentiment among homebuilders.
Analysts said the data-dependent nature of the Fed means the U.S. dollar could see periods of weakness.
"The fact that the Fed seems likely to taper stimulus this year should generally see the dollar hold an edge against its rivals. But the dollar would be susceptible to any downside surprises to data," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Sterling bucked the trend and gained on the greenback. It reached a two-week high of $1.5270 after minutes from the Bank of England's latest meeting surprised markets by showing all nine MPC members had voted against expanding the bank's bond-buying program. At that level, sterling ran into resistance around the 100-day moving average and slipped to $1.5215, still up 0.4 percent on the day.
(Read More: Bank of England unites against QE under Carney)
This wrong-footed investors who had built large bets against sterling in recent weeks expecting further signals of policy easing.
The Canadian dollar fell after the Bank of Canada said it will hold its benchmark interest rate steady at 1 percent, while the economy remains fragile and inflation stays low. The U.S. currency last traded up 0.4 percent at C$1.0416.