In her testimony, Yellen expected the USA economy will continue to expand at a moderate pace over the next couple of years, as the steady job gains would support income growth and then consumer spending.
The US currency's recent advance, notably against the yen, has stalled towards the end of this week as Federal Reserve Chair Janet Yellen curbed some of the monetary tightening expectations that had supported the greenback.
The Dow Jones Industrial Average jumped more than 120 points to a fresh all-time high, small caps rallied more than 1% and emerging-market equities surged as Yellen expressed confidence in the American economy while suggesting inflation rates won't force the Fed's hand.
It's premature to reach the judgment that we're not on the path to 2 percent inflation over the next couple of years.
Technology shares also rose sharply, with the tech index also up 1.3%.
Facing sometimes tough questions from legislators, Yellen presented the Fed's required semi-annual report to Congress - possibly for the last time if President Donald Trump decides not to reappoint her for a second term at the helm of the USA central bank. Will it be Bank of England, the European Central Bank, Sweden's Riksbank or Norges Bank?
In Europe, the FTSE 100 index of leading British shares was down 0.3 percent at 7,394 while Germany's DAX was flat at 12,645. The Fed has raised its benchmark interest rate three times since December, to a range of 1 percent to 1.25 percent.
The Canadian dollar weakened slightly against its United States counterpart, but at 1.2730 the loonie is still around the 12-month high level.
In late NY trading, the euro fell to 1.1416 US dollars from 1.1475 USA dollars, and the British pound rose to 1.2890 USA dollars from 1.2853 US dollars in the previous session.
The US dollar was steady against the yen during the Asian session, but weakened against most other majors.
-The euro fell 0.4 percent to $1.1422.
The Dow is up 1,769.54 points, or 9 percent.
The dovish sentiment from the Fed at the same time put the S&P 500 financials .SPSY , which tend to benefit from higher rates, last among sectors, ending with just a gain of 0.1 percent.
-The 10-year U.S. Treasury yield dropped four basis points to 2.32 percent.