European session review: USD little changed after U.S. Treasury Secretary Yellen’s inflation comments and ahead of April jobs data

USD traded flat against most of its major rivals in the European session on Wednesday, as investors continued to weigh the risks of higher inflation and potential interest rate hikes after the latest comments by the U.S. Treasury Secretary Janet Yellen, while awaiting an official report on the employment situation in the U.S. for April, which is to be released tomorrow.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, edged down 0.05% to 91.24.

In an interview with The Atlantic, U.S. Treasury Secretary Janet Yellen said Tuesday that interest rates may need to rise somewhat to prevent the U.S. economy from overheating, partially due to heavy government spending. Yellen’s comments heightened market participants’ worries about inflation. Later,  however, she clarified that she was not forecasting rate increases due to potential inflation.

Investors also awaited a slew of important U.S. economic data, including the U.S. services PMI on Wednesday and April non-farm payroll reading on Friday, which are expected to provide more clues on the health of the U.S. economy. There are speculations that quick economic recovery could force the U.S. Federal Reserve to hike interest rates and to begin tapering its asset purchases sooner than expected.