Cautious optimism was the underlying theme in Wednesday’s trading leading into Fed Chair Powell's testimony, with a broadly firmer US dollar underpinned by higher Treasury yields amid improved risk tones. Meanwhile, markets weighed in the ongoing US-China trade talks and escalating Japan-South Korea trade tensions.

USD/JPY refreshed six-week tops at 109.00 in early trades and consolidated the recent gains near 108.90 levels almost throughout the session. On the European currencies-side, EUR/USD clung to 1.12 handle amid ECB QE hopes and weak fundamentals while the GBP/USD stalled its tepid recovery and fell back to mid-1.2400s amid looming Brexit and UK growth concerns.

From the Eurozone and US docket, there is no relevant macro news and hence, the speeches by Fed official Bullard and BOE MPC member Tenreyro will be closely eyed. On the data front, the immediate focus remains on the UK monthly GDP, trade balance, industrial and manufacturing production data, all of which will drop in at 08:30 GMT.

Markets eagerly await Fed Chair Powell’s testimony on the Semi-annual Monetary Policy Report before the House Financial Services Committee, in Washington DC due later today at 14:00 GMT. Later in the American mid-morning, at 18:00 GMT, the FOMC will publish its June meeting’s minutes, which once again help gauge the Fed’s interest rates outlook.

For oil traders, the crude stocks data from the Energy Information Administration (EIA) will be reported at 14:30 GMT.

Oil prices rose on Wednesday after data showed U.S. crude inventories fell for a fourth straight week, while Gold futures faded rejection at the $1,400 barrier and turned lower close to $1,390 levels.