Jul 16, 2012 (Dow Jones) NEW YORK--Copper futures pared their losses Monday as the dollar gave back its gains against the euro, with investors turning their attention to Federal Reserve Chairman Ben Bernanke's upcoming testimony to Congress.

The most actively traded contract, for September delivery, fell 1.90 cents, or 0.5%, to settle at $3.4850 a pound on the Comex division of the New York Mercantile Exchange.

Copper prices rebounded off their deepest losses with the help of a firmer euro, which pushed back against the dollar to trade at as high as $1.2286. Copper futures are denominated in dollars and, when the dollar weakens, become less expensive for investors who use other currencies, drawing these buyers to the market.

Earlier in the day, copper also caught a boost from Federal Reserve Bank of New York data that showed the Empire State's manufacturing activity rebounded to 7.4 in July, from 2.29 in June. An uptick in the overall reading suggests "that conditions improved modestly over the month," the report said.

Copper easily conducts electricity and does not rust when exposed to water, which puts the metal in high demand for widespread manufacturing applications.

However, trading volumes were muted throughout the day as investors turned their sights to Mr. Bernanke's two-day semiannual testimony to Congress, which begins Tuesday.

Investors across commodities remain hopeful that the central bank will hint at impending easy money efforts aimed at propping up U.S. growth. A faster-growing economy would be a boon for copper, as the metal is used in everything from phones and air-conditioners to cars and plumbing. As business activity ramps up, demand for copper would increase, lifting up prices.

Elsewhere, Goldman Sachs said there is "substantial" profit potential in copper should market sentiment strengthen. The bank kept its price forecast for three-month delivery copper traded on the London Metal Exchange unchanged at $8,000 a metric ton, and it's six month forecast at $9,000 a metric ton.

Copper settlements (ranges include electronic and pit trading):
Jul $3.4810; down 1.95 cents; Range $3.4700-$3.4850
Sep $3.4850; down 1.90 cents; Range $3.4655-$3.5080