Minutes of the FOMC meeting in June showed a camp of officials who saw benefits from allowing the unemployment rate to run below its long-run normal level - estimated at 4.6 percent, according to the median quarterly forecast last month - for a "sustained" period. "There's a lot more event risk later in the week", Issa said.
Europe's main bourses faltered despite a fresh flurry of M&A activity.
"Markets are mulling the fairly subdued FOMC tightening theme ahead of Yellen's speech and I think that this corresponds to softer yields also giving rise to some of the pulls that we see in these currencies", said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore.
"At the current level we would not be chasing the move higher here, especially not before earnings", said Alvise Marino, FX strategist at Credit Suisse in NY.
A stronger dollar and rising rates are creating a push and pull in equity market leadership, Arone said.
MSCI's all-country world stock index fell 0.11 percent, while the pan-European FTSEurofirst 300 index of leading regional shares slid 0.71 percent to a provisional close of 1,490.15. The South African rand, Turkish lira and Russian Federation ruble all dropped around 0.8 per cent as the emerging market selling resumed too.
Panasonic rose 1.97 percent to 1,521 yen and Sony tacked on 2.60 percent to 4,439 yen. Yellen recently said that asset prices by some measures "look high, but there's no certainty about that".
The dollar increased by almost 0.4% against the yen which was a high of two months.
After prepared testimony and some three hours of quizzing, there's one big question Federal Reserve Chairwoman Janet Yellen left unanswered, and it holds the possibility of undoing some of Wednesday's big stock-market gains SPX, +0.75%.
From a medium-term perspective, interest rates would be the chief monetary policy tool, although the balance sheet could be used again if there was material deterioration in the economic outlook.
The report also noted that long-term nominal U.S. Treasury yields have declined and remained quite low by historical standards since the beginning of the year, largely reflecting "declines in inflation compensation" due to soft inflation data.
In commodities, crude oil slipped back after pushing higher overnight in Asia.