Traders will be listening closely to the exchanges between Powell and lawmakers on Wednesday and Thursday for hints about the Fed's next move on interest rates.
The market rallied through much of June after the central bank signaled it's prepared to cut rates for the first time in a decade to offset slowing global growth and the fallout from U.S. trade conflicts. But an unexpectedly strong U.S. jobs report last Friday has dimmed investors' expectations.
Many traders still expect the Fed will cut its benchmark rate by a quarter percentage point at the end of the month, but fewer are now expecting a half-point reduction.
The question is whether the Fed will still see a good argument for cutting interest rates after the strong U.S. June jobs data.
Some economists have suggested that if the Fed surprises the markets late this month by choosing not to cut rates, it might be because Powell and other Fed policymakers don't want to be seen as having caved to Trump's relentless pressure.
"Fed Powell's testimony will be scrutinized for both his views on the economic situation and guidance in terms of any upcoming moves," said Jingyi Pan, market strategist for IG in Singapore.
Shares in Europe mostly declined after the European Union trimmed its forecasts for economic growth next year as trade tensions weigh on the bloc's manufacturers.
Germany's DAX declined 0.4% to 12,285, while Britain's FTSE 100 fell less than 0.1% to 7,533. France's CAC 40 was flat at 5,574 in midday trading.
U.S. shares were set to drift lower with Dow futures slipping 0.2% to 26,725. S&P 500 futures also dipped 0.2% to 2,976.
Japan's benchmark Nikkei 225 edged down nearly 0.2% to finish at 21,533.48. Australia's S&P/ASX 200 added 0.4% to 6,689.80. South Korea's Kospi gained 0.3% to 2,058.78. Hong Kong's Hang Seng rose 0.3% to 28,204.69, while the Shanghai Composite fell 0.4% at 2,915.30.
ENERGY: Benchmark crude oil added $1.25 to $59.08 per barrel. It gained 17 cents to $57.83 a barrel on Tuesday. Brent crude oil, the international standard, rose $1.34 to $65.50 a barrel.
CURRENCIES: The dollar rose to 108.94 Japanese yen from 108.86 yen. The euro gained to $1.1217 from $1.1208.
Matt Ott in Washington contributed to this report.