Before Bernanke's testimony to the Senate Banking Committee on Tuesday, investors had increased their bets that he would drop more hints about further monetary stimulus after the release of disappointing US retail sales data on Mo nday. When he failed to specify measures to lift the economy they covered their shorts on the dollar.
Another round of quantitative easing would weigh on the greenback because it would result in flooding the financial system with dollars, which would diminish the currency's value.
"Despite expectations by many market participants that the Fed chief would yield to calls for quantitative easing, his statement indicated nothing of the sort," said Neal Gilbert, currency strategist at GFT in New Jersey.
"He continued to repeat the same line that he did at his monetary policy decision press conference back in June, along with what was released last week in the minutes of that meeting."
Bernanke said the Fed stands ready to offer additional support to the US economy, but stopped short of signaling action in the near term. He said the US recovery is being held back by Europe's debt crisis and uncertainty surrounding US fiscal policy.
The euro hit session lows against the dollar at $1.2187 in the aftermath of Bernanke's comments. It was last at $1.2276, little changed on the day. Stops at $1.2240 were taken out as were bids at $1.2210-$1.2200, traders said.
Weakness in the euro zone's shared currency, however, has not sparked that much demand for protection in the options market against further falls. Traders expect a gradual fall in the euro from current levels.
The cost of protection against further euro weakness actually cheapened on Tuesday, with puts -- or bets the currency would depreciate -- trading at 1.08 percent. Earlier this month, puts were at 1.5 percent.
The euro hit a 3-1/2-year low against sterling and dropped to a record trough against the Australian dollar .
The dollar reversed losses against the Swiss franc to also trade little changed at 0.9787 franc. It was also little changed versus sterling and the New Zealand dollar .
Still, quantitative easing is not exactly off the table, said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "The dollar may have limited upside scope," he said, which "should buy the dollar some time to test fresh highs."
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 under a program known as "Operation Twist."
However, it held off from launching a third round of outright bond purchases that would expand its balance sheet, known as quantitative easing.
The greenback firmed 0.2 percent against the yen to 79.05 yen, a day after dropping to one-month lows.
Expectations that the Bank of Japan could intervene and check gains by the yen kept investors wary, traders said.
Japanese Finance Minister Jun Azumi hit out at speculators betting on gains in the yen due to weak US economic data, and hinted the government was prepared to intervene to stem excessive moves.