Dollar slips vs. euro, yen ahead of Italian bond auction

The dollar slipped lower against the euro and the yen on Wednesday as markets stabilized in the wake of inconclusive Italian election results and investors awaited an auction of Italian bonds later in the session.

During European morning trade, the dollar eased back from seven-week highs against the euro, with EUR/USD edging up 0.11% to 1.3076.

Italian election’s ended with no party or coalition in control of the Senate, raising the threat of a prolonged period of political instability and potentially reigniting the crisis in the euro zone.

Investors were looking ahead to an auction of Italian 10 and five-year government bonds later in the session after the yield on Italian 10-year bonds rose to the highest level since December on Tuesday.

Elsewhere, the dollar slipped lower against the yen, with USD/JPY down 0.32% to 91.68.

Federal Reserve Chairman Ben Bernanke defended the bank's easing program on Tuesday, saying that the benefits outweighed the possible costs. The comments came in testimony to the Senate on monetary policy.

The greenback was little changed close to 31-month highs against the pound, with GBP/USD edging up 0.07% to 1.5137.

Elsewhere, the greenback edged lower against the Swiss franc, withUSD/CHF dipping 0.08% to 0.9311.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD inching up 0.05% to 1.0263,AUD/USD falling 0.35% to 1.0192 and NZD/USD slipping 0.16% to 0.8234.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, slipped 0.09% to 81.83.

Later Wednesday, the U.S. was to publish official data on durable goods orders and pending home sales, while Ben Bernanke was to testify on monetary policy for a second day. In addition, European Central Bank President Mario Draghi was to speak an event in Germany.