LONDON (Reuters) – The dollar slipped on Tuesday but was stuck within recent ranges as investors waited for U.S. Federal Reserve Chair Jerome Powell to speak at a congressional hearing later in the day.

European shares were up in early trading, following a late-session recovery for Wall Street, while U.S. Treasury yields were a touch higher.

Investors are hoping that Powell will give clues as to the timing of monetary policy tightening, when he answers questions from the Senate Banking Committee as he seeks a second four-year term as head of the Fed.

Powell will tell Congress that the bank will “prevent higher inflation from becoming entrenched”, pre-released comments show.

At 0840, the U.S. dollar index was around 0.1% lower on the day, at 95.817 – well below the 16-month highs it touched at the end of November amid increasing hawkishness from Fed policymakers.

“We expect any dollar dips to be short-lived as the imminent Fed tightening story continues to offer a very positive undercurrent for the greenback,” wrote ING FX analysts in a note to clients.

“An acknowledgement that faster rate hikes are needed could be enough to offer more support to the dollar today,” ING said.

Some of Wall Street’s biggest banks now expect four U.S. interest rate hikes this year, starting in March.

Euro-dollar was stuck within recent ranges, around $1.1346, but the euro hit a seven-week high versus the Swiss franc, with the pair changing hands around 1.0497.

This follows a rise in sight deposits held by the Swiss National Bank last week, which is a possible sign that the central bank is intervening to limit the franc’s strength.

“Outflows from the CHF may continue today if Powell sends hawkish signals to the market and UST yields rise again, assisting a more decisive break above 1.0500 in EUR/CHF,” wrote ING.

The Swiss franc is also acting as a safe-haven to hedge political risk from Italy, ING said. The Italian Parliament will convene to choose a new president this month with Premier Mario Draghi seen as the leading candidate. Italian government bond yields rose as investors fretted about the country’s political stability.

The U.S. dollar was up around 0.1% against the Japanese yen at 115.280.

Japanese households’ inflation expectations rose to a two-year high, a quarterly survey showed, in a sign the rising cost of living was starting to change public perceptions about future price moves.

The British pound touched a two-month high versus the U.S. dollar at $1.362.

The Australian dollar was up 0.2% at $0.71825, helped by data showing retail sales surpassed forecasts for a second month running in November.

After successfully containing the coronavirus for most of the pandemic, Australia has been swamped by the rapid spread of the Omicron variant, with infections near record levels.

COVID-19 hospitalisations in the United States hit a record high on Monday, as a surge in infections caused by the highly contagious Omicron variant strains health systems in several states.

U.S. consumer inflation data for December is due to be released on Wednesday.

Elsewhere, bitcoin was back up around $42,000, having dropped below $40,000 on Monday for the first time since September.

(Reporting by Elizabeth Howcroft; Editing by Peter Graff)