The dollar hit session highs against the euro on Tuesday after Federal Reserve Chairman Ben Bernanke said the U.S. central bank is prepared to take further action to boost a slowing economy but offered few details. The euro [EUR=X 1.2194 -0.0078 (-0.64%) ] fell to session lows versus the dollar at $1.2209. The dollar index [.DXY 83.53 0.43 (+0.52%) ] was last up 0.39 percent at 83.545. Earlier the index hit a session low of 82.911, its lowest since July 6, but could find support around 82.60/70, the intra-day highs on June 26 and 27. "Key for the dollar, and financial markets as a whole, will be the extent to which Bernanke hints that more policy easing is needed to boost the U.S. economy, especially in light of recent signs of stalling growth," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "A dovish tone to Mr. Bernanke's comments would weigh on the dollar." More Fed quantitative easing (QE) would be negative for the greenback as this would mean flooding the financial system with dollars and diminishing the currency's value. With investors positioning for more easing by the Fed , analysts saw a risk that the dollar may bounce or that assets such as stocks and growth-linked currencies could drop if the Fed chief stops short of signaling more stimulus. The Fed last month expanded efforts to keep long-term interest rates low by announcing it would buy an additional $267 billion in long-term bonds while selling short-term securities. However, it held off from launching a third round of outright bond purchases that would expand its balance sheet, a form of stimulus known as quantitative easing. Bets on more QE grew after disappointing U.S. retail sales data on Monday. The U.S. dollar last traded up 0.48 percent against the Swiss franc at 0.9831 franc [CHF=X 0.9848 0.0064 (+0.65%) ], falling as well as versus the Australian dollar [EURAUD= 1.1907 -0.0064 (-0.53%) ], which fell 0.53 percent to US$1.1908. Strategists at Citigroup said Bernanke will likely leave the door open to give investors some hope for additional measures without making concrete commitments or being clear on timing. While this would keep the dollar somewhat weaker against most major currencies except the euro, any bounce in the common currency was likely to prove fleeting, given the problems in the euro zone, they added. The greenback, however, firmed 0.27 percent against the yen to 79.07 yen [JPY=X 79.06 0.20 (+0.25%) ], a day after dropping to one-month lows. Expectations that the Bank of Japan could intervene and check gains by the yen was keeping investors wary of that pair, traders said. Japanese Finance Minister Jun Azumi hit out at speculators betting on gains in the yen due to weak U.S. economic data, and hinted the government was prepared to intervene to stem excessive moves.

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