Investing.com - The dollar regained ground against the other major currencies on Thursday, recovering from a selloff in the previous session after the Federal Reserve tempered expectations for higher U.S. interest rates.
EUR/USD dropped 1.4% to 1.0711, after rallying to highs of 1.1041 in the wake of the Fed statement, well off Friday’s 12-year trough of 1.0461.
In a statement following its monetary policy meeting the U.S. central bank downgraded its forecasts for growth and inflation and lowered its interest rate projections.
The Fed dropped a reference to being "patient" on the timing of rate hikes, but added that the change in its forward guidance did not mean it has decided on the timing for an initial rate increase.
The statement prompted investors to push back expectations on the timing and pace of future rate increases.
Fed Chair Janet Yellen also warned that the stronger dollar was acting as a drag on U.S. exports and was pushing down inflation.
USD/JPY was last up 0.47% to 120.66, recovering from overnight lows of 119.28.
Elsewhere, GBP/USD was down 1% to 1.4823, while USD/CHF rallied 1.65% to 0.9942.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last up 1.88% to 99.21, after falling to three-week lows of 94.77 on Wednesday.