SINGAPORELONDON, March 9 Reuters The dollar held near a threemonth high on Thursday, underpinned by Federal Reserve Chair Jerome Powell39;s message that interest rates would have to go higher and possibly faster.

The yuan weakened after the government reported unexpectedly low inflation.

In the second day of his testimony to Congress on Wednesday, Powell reaffirmed his message, though he struck a cautious note, saying debate on the scale and path of future rate hikes was still underway and would depend on data.

That caused the U.S. dollar to pause its sharp rally from earlier in the week, retreating from close to a threemonth top against the yen . It was down 0.6 at 136.55 yen.

The euro and sterling similarly edged away from multimonth lows, flattening at 1.0555 and 1.1845, respectively.

Powell conceded that the March decision is datadependent, said Thierry Wizman, Macquarie39;s global FX and rates strategist. The question facing us, therefore, is whether January39;s economic reacceleration was a blip or a trend.

The U.S. dollar index edged 0.05 lower to 105.57, and remained near a threemonth peak of 105.88 hit on Wednesday.

A slew of U.S. strong economic data in recent weeks, pointing to persistent inflationary pressures, led to Powell saying on Tuesday that the Fed would likely need to raise interest rates more than expected.

Fed funds futures now imply a nearly 70 chance the Fed will raise rates by 50 basis points this month, up from just about 9 a month ago….