Investing.com - The dollar nosedived more than 1%, after the Federal Reserve increased interest rates by 0.25% to a 0.75-1% range.
The Federal Reserve struck a familiar tone in its statement, pointing out that interest rate increases “will be gradual” in 2017, and maintained its view of three rate hikes, with the remaining two rate hikes expected later this year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dipped 0.87% to 100.74, following the release of the interest rate decision.
The greenback added to losses and last traded at 100.47 down 1.13%, after Janet Yellen fielded a raft of questions concerning the Fed’s decision to raise rates; future monetary policy decisions and the current as well as future prospects of the U.S. economy.
Ms. Yellen struck a somewhat dovish tone, as she said the US central bank would continue to provide accommodative monetary policy to support the US economy but warned against a prolonged period of lower rates in order to avoid a situation which forces the fed to “raise rates rapidly”.
GBP/USD tacked on 1.21% to $1.2296, after hitting a session high of $1.2256 prior to the release of the Fed's interest rate decision.
The EUR/USD rose 0.97% to trade at $1.0707, while USD/CAD lost 1.22% to $1.3316.
Meanwhile, the dollar lost ground against the yen with USD/JPY down 1.35% to 114.56.