The dollar was steady against major currencies after dropping overnight, with investors cautious ahead of Federal Reserve chairman Alan Greenspan's testimony tomorrow. Greenspan testifies on the US economy to the joint economic committee of Congress tomorrow, and the market will be looking for any hints that the US rate-setting body could pause in raising interest rates following recent weak data. "Encouraged by the recent soft patch in G10 economic data and a fast declining Baltic Dry Freight Index -- a barometer of Chinese demand --, investor focus is currently very much on downside risks and a potential end to the Fed tightening cycle," said HBOS currency strategist Naeem Wahid. The market is starting to price in just two more US rate hikes this year, and if the Fed were to take a pause in its tightening cycle, concerns over the financing of the US current account deficit could well resurface and overshadow the US short-term yield advantage, he said. Renewed worries over the US deficits could also be sparked by US trade data on Friday, which are expected to show the trade deficit widening to 58 bln usd in April after stabilising to 55 bln the previous month. Meanwhile, however, the current respite for the euro is expected to be short-lived. Most market commentators expect no better than a stabilisation for the single currency, which has been battered by economic and political woes of late. "The beleaguered single currency appears to have stabilised, but this could merely mark a pause before a further decline," said Mitul Kotecha at CALYON. Investors are awaiting the outcome of various meetings between EU officials to determine what the next step will be following the rejections of the EU constitution in the recent referendums in France and Holland. The most important event, however, will be the EU council meeting on June 16-17, Kotecha said. News on the economic front meanwhile is still failing to provide any boost for the euro, with reports that the Dutch central bank has slashed its 2005 growth forecast the latest in a string of woeful news on the euro zone economy. Dutch central bank president Nout Wellink said in an interview with de Volkskrant that the bank is cutting its forecast for GDP growth this year to just 0.4 pct from 1.7 pct previously. The economic performance in the last two quarters has been especially disappointing, Wellink told the paper.