By William L. Watts

The U.S. dollar regained a little ground versus major rivals Tuesday, after an opinion column by U.S. Federal Reserve Chairman Ben Bernanke outlined steps the central bank can take to unwind its money-printing efforts and mute inflation once the economy begins to recovery.

"We are confident we have the necessary tools to withdraw policy accommodation, when that becomes appropriate, in a smooth and timely manner," Bernanke wrote, in a column published in The Wall Street Journal. "When the time comes to tighten monetary policy, we must either eliminate these large reserve balances or, if they remain, neutralize any potential undesired effects on the economy."

Bernanke outlined five specific steps the Fed could take to ensure excess money growth doesn't get the chance to fuel inflation, but reiterated that economic conditions are unlikely to warrant a tightening of monetary policy "for an extended period."

Bernanke is scheduled to testify before the House Financial Services Committee later Tuesday, delivering the semiannual report on the economy from the Federal Open Market Committee. He will repeat his testimony on Wednesday before the Senate Banking Committee.

Market participants were hoping Bernanke would use the testimony to provide some more detail on how the Fed plans to exit its current policy stance, particularly its quantitative-easing measures, said Jane Foley, research director at Forex.com.

"In effect, Bernanke has now provided some detail and the slightly firmer stance of the dollar suggests that this is a step in the right direction in displacing concerns that quantitative easing will ultimately result in a significant increase in inflation," she said.

The dollar index (DXY), which tracks the greenback against a trade-weighted basket of six major currencies, was at 78.983, up from 78.851 in North American trade late Monday.

The dollar bought 94.25 yen, little changed from 94.29 yen. The euro changed hands at $1.4220, down slightly from $1.4232 late Monday, and the British pound bought $1.6425, down from $1.6550.

Traders said equity markets are likely to continue setting the tone, however. The dollar has tended to weaken when equity markets are on the rise.

U.S. stock index futures pointed to a higher open for Wall Street amid the ongoing flow of second-quarter earnings. Index futures received a boost after Peoria, Ill.-based construction-equipment giant Caterpillar (CAT) raised its 2009 profit outlook.

"It will be the stock markets that dominate currencies again today and with some heavyweight earnings due, positive readings could further increase the appetite for risk in turn further supporting the higher yielding currencies and dragging on the safe haven dollar," said James Hughes, an analyst at CMC Markets.

Currency markets were unmoved by the release of the minutes of the Bank of Japan's June 15-16 meeting, in which all members of the Bank of Japan's policy board agreed that economic conditions in Japan had stopped worsening, with some members beginning to discuss the end of special liquidity measures.

Currency investors in Japan were also keeping an eye on domestic political moves. Prime Minister Taro Aso dissolved the lower House of Representatives Tuesday for a general election Aug. 30, and apologized to lawmakers in his Liberal Democratic Party for a series of recent local election defeats.