March 21, 2006

The dollar rose from a recent seven-week low versus the euro and firmed against other currencies on Tuesday after Federal Reserve Chairman Ben Bernanke offered upbeat comments on the U.S. economy.

Bernanke said late on Monday the economy should keep growing at a brisk pace even if the housing market slows, but the dollar failed to receive a significant boost as Bernanke offered few new clues on how much more the Fed would raise rates.

"Bernanke was balanced. The Fed is trying to keep its options open and the rest of the (tightening) cycle is dependent on data," said Jim McCormick, head of foreign exchange research at Lehman Brothers.

"But the market is not looking at an isolated tightening cycle from the Fed. We have a much more coordinated global tightening cycle. You can see from the price action in the past 24 hours that the market lacks conviction with what to do in the G3 currencies and we are bouncing in ranges."