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The U.S. central bank should raise interest rates "in the coming months" if economic growth picks up and the labour market continues to improve, Yellen said on Friday.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.25 percent as markets pondered the Fed outlook.
Japan's Nikkei stock index added 0.5 percent, as the yen weakened and expectations rose that the government would delay a sales tax hike scheduled for April next year.
Japanese Prime Minister Shinzo Abe plans to postpone the tax increase by two and a half years, until October 2019, a government official said on Sunday.
On Friday, Wall Street posted daily and weekly gains as investors looked to a three-day weekend in the United States ahead of Monday's Memorial Day holiday.
While higher U.S. interest rates could sap global liquidity, Yellen's comments were taken in stride by Wall Street as they suggested the U.S. economy was strong enough to weather another rate increase, following from the December hike.
Her comments also were largely in tune with a chorus of other Fed officials who have indicated in recent weeks that policymakers could resume raising rates as soon as next month.
The probability of a rate increase at the Federal Open Market Committee's June 14-15 meeting rose to 34 percent from 30 percent before Yellen's remarks, according to CME Group.
Market bets on a rate increase at the July 26-27 policy meeting edged up to 60 percent, more than double the estimate from a month ago.
"This was exactly the type of endorsement that the market had been hoping for and they rewarded the dollar as a result," wrote Kathy Lien, managing director of FX strategy at BK Asset Management.
The dollar index was trading around two-month highs, adding 0.3 percent to 95.826.
Against its Japanese counterpart, the dollar rose 0.4 percent at 110.77 yen after earlier notching a fresh one-month higher of 110.86 yen.
The dollar also got a lift from revised gross domestic growth data for the first quarter released on Friday, that showed the economy did not slow as much as initially indicated.
Because of Yellen's emphasis on the labour market, the U.S. nonfarm payrolls report on Friday will attract more than the usual attention.
Economists expect U.S. employers to have added 170,000 jobs in May, slightly more than they did in April, and hourly wages to show a 0.2 percent increase from the previous month.
The euro wallowed at 2-1/2 month lows, edging down 0.1 percent to $1.1107.
The European Central Bank will meet on Thursday, and is expected to keep interest rates on hold and reaffirm its focus on implementing its stimulus package announced in March.
Crude oil futures rose after scoring weekly gains, though they slipped on Friday as the dollar strengthened ahead of the U.S. holiday weekend. Prices remained just shy of the key $50 per barrel level.
Brent crude added 0.3 percent to $49.48 a barrel, after gaining 1 percent last week. U.S. crude was 0.5 percent higher at $49.58 after rising about 3 percent for the week.
