Dollar recovers from Fed-inspired losses

U.S. Currency
Romeo Gacad | AFP | Getty Images

Rebounding from steep losses in the previous session on a more cautious than expected Federal Reserve statement on interest rates, the dollar rose broadly on Thursday as investors remained bullish on the greenback.

The dollar suffered its biggest one-day fall against the euro and sterling in six years on Wednesday. Against the Swiss franc, it posted its worst daily performance since Jan. 15, when the Swiss National Bank removed a peg on the Swiss franc against the euro. Against the yen, the dollar had its weakest day since December.

In a Fed statement issued after its policy meeting on Wednesday, the U.S. central bank removed reference to being "patient" on rate rises but downgraded its views on the economy and inflation and lowered its interest rate trajectory.

Read MoreFed removes 'patient' but says no April hike coming

Richard Franulovich, senior currency strategist at Westpac in New York, said the Fed's dovish statement was an excuse to sell lopsided positions on the dollar. But he added that the greenback is still a good bet in the medium term.


"The Fed is less supportive of the dollar, but the dollar's bull trend is built on more than just the Fed," he said. "I still think parity with the euro is still achievable. It's difficult to see the euro gain any momentum with the ECB buying $3 billion in bonds every day and Greece is still unresolved."

In late-afternoon trading, the euro was down 1.6 percent at $1.066 after having traded above $1.10 on Wednesday night. The dollar index was last down 0.15 percent at 99.11. The dollar was up 0.5 percent at 120.81 yen.

Technically, the dollar has kept its bullish trend, according to forex portal ActionForex.com, as it stayed above support levels.

For instance, the euro is trading below the $1.1096 resistance area. The price action from $1.0461 is viewed as consolidation and might extend. But that should be followed by downside breakout sooner or later, ActionForex.com said.

Switzerland's central bank also left rates unchanged on Thursday, driving the franc up 0.8 percent against the euro to 1.055 francs. The dollar rose 0.8 percent versus the franc to 0.9903 franc.