The U.S. dollar index was 0.1% higher at 105.06, rising from an overnight low of 104.80, a 3-1/2-week trough

The U.S. dollar rose on Tuesday from its lowest levels in almost a month versus other major currencies in the previous session, as traders awaited testimony from Fed Chair Jerome Powell days after an unexpectedly soft U.S. jobs report.

The euro held its ground after Monday’s sharp swings as investors came to terms with a hung parliament in France, which points to a potential political gridlock, but reduces fiscal concerns stemming from outright far-right or leftist victories.

The U.S. dollar index was 0.1% higher at 105.06, rising from an overnight low of 104.80, a 3-1/2-week trough.

The index tumbled almost 1% last week, exacerbated by Friday’s monthly payrolls report, which boosted bets for the Federal Reserve to soon start reducing rates.

Traders currently see about a 76% probability of a rate cut at the September meeting, up from 66% a week ago, as per the CME Group’s FedWatch Tool. Another cut is expected by December.

The recent run of weaker economic data is pointing to the prospect of Powell being more willing to signal the potential for rate cuts, according to Derek Halpenny, currency strategist at MUFG.

We see the dollar as vulnerable to further selling today given the macro backdrop, he added.

The CPI data on Thursday could also be crucial, market watchers said, with recent figures showing a cooling from unexpectedly high levels at the start of the year.

The euro was down at $1.0819, not far from Monday’s nearly four-week high of $1.0845. The single currency also slipped as low as $1.07915 the same day.

The currency has bounced around in recent weeks due to uncertainty over French politics, which still remains even after Sunday’s vote. The French left said on Monday that it wanted to run the government, but conceded that talks would be tough and take time.

The euro seems to be waiting for cues from French coalition talks, with scenarios ranging from a left-wing government to a market-friendly technocrat prime minister, said Francesco Pesole, currency strategist at ING.

FX volatility has continued to drop in the meantime, but EU politics, Powell’s testimony today and U.S. consumer price index on Thursday may revamp it, Pesole added.

Sterling was also marginally lower at $1.2799, after reaching $1.28455 on Monday, its strongest levels since June 12.

The yen was little changed at 160.93 per dollar, finding some equilibrium this week after bouncing back from Wednesday’s nearly 38-year low of 161.96.

The currency has found little backing in increased speculation the BoJ may increase rates again on July 31, following the first hike since 2007 in March.