The greenback has risen sharply after previous week’s Fed decision, which hinted that interest rate hikes and asset tapering could come sooner than expected

The dollar rose on Tuesday morning in Asia. The greenback paused as investors await testimony from U.S. Fed Chairman Jerome Powell following the central bank’s surprise policy decision.

The U.S. Dollar Index edged up 0.04% to 91.922 by 4 AM GMT.

The USD/JPY pair inched up 0.11% to 110.42.

The AUD/USD pair dropped 0.26% to 0.7515 and the NZD/USD pair inched down 0.14% to 0.6976.

The USD/CNY pair edged down 0.02% to 6.4645.

The GBP/USD pair edged down 0.10% to 1.3914. Investors await a further re-opening of the U.K. economy on Jul. 19 as well as a Bank of England policy decision due Thursday.

The greenback has risen sharply after previous week’s Fed decision, which hinted that interest rate hikes and asset tapering could come sooner than expected. However, the dollar gave up some of those gains on Monday.

We’ve had a meaningful shift at the Fed from a longtime dovish stance to now a slightly hawkish one. We’ve had a bit of a positioning cleanout, the whole world was mega short the dollar and that’s in good part probably been cleaned out already, and now we take a wee breath before the next move up, Westpac currency analyst Imre Speizer told Reuters.

Investors will now focus on the U.S. labour market, whose performance will likely influence the Fed’s next moves as well as Powell’s testimony before a House of Representatives subcommittee hearing later in the day.

However, Powell noted sustained labour market improvement and the recent increase in inflation in written remarks ahead of his testimony.

Other Fed officials, including St. Louis Fed President James Bullard and Dallas Fed President Robert Kaplan, also offered toned-down rhetoric. However, New York Fed President John Williams warned it was too soon to shift policy as he expects inflation to ease from about 3% in 2021 to around 2% in 2022 and 2023. Some investors were unsure of Williams’ prediction, however.

The Fed is nearly always late on such things, with core inflation potentially higher at just under 3% by the end of 2022. That is not 2% inflation, with the Fed eventually feeling the pressure to move on interest rates, RBC Capital Markets chief economist Tom Porcelli said in a note.

In the meantime, we have no doubt with that 2% forecast as cover, Powell will attempt to play down the likelihood of a rate hike in 2022. But just as he eventually relented on taper talk, he will relent on dismissing talk about hiking rates too. Just give it more time, the note added.