US dollar sags ahead of Bernanke testimony THE US dollar has sagged and US bond yields have fallen ahead of two days of testimony to congress on the economy by Federal Reserve chairman Ben Bernanke. The pullback came amid speculation on whether Bernanke would confirm the Fed's path towards trimming back its $US85 billion-a-month QE bond purchases later this year or signal that economic growth needs more strength before that happens. At 2100 GMT on Tuesday (0600 AEST Wednesday), the euro was at $US1.3164, compared with $US1.3064 late on Monday. The US dollar also fell to Y99.04 from Y99.82, while the euro was barely changed at Y130.43. Bernanke will speak to the House of Representatives financial services committee on Wednesday morning, with the state of US economic growth and the Fed's five-year-old easy-money policy - and its plan for interest rates - the key topic. Bernanke has strained to explain in recent weeks that even if the Fed begins reeling in the quantitative-easing program, it does not mean that interest rates will be increased and monetary policy will be tightened before 2015. But markets have shown their doubts, with bond yields and interest rates climbing sharply since May in expectation of tightening. Currency analyst David Song at DailyFX said he expects a confirmation of the plan to begin exiting QE, which could strengthen demand for the greenback. "The growing discussion at the Federal Reserve to taper the asset-purchase program may prompt US lawmakers to press Mr Bernanke," he said. Any potential comments surrounding the timing and the pace of the exit should prop up the reserve currency as the (Fed) appears to be slowly moving away from its easing cycle. The pound pushed higher, to $US1.5155 from $US1.5100, while the US dollar fell to 0.9391 Swiss franc from 0.9480.