Euro surges against dollar on Fed statement

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The euro rose on Wednesday after the U.S. Federal Reserve left its benchmark interest rates unchanged.

Adhering to market expectations, the Fed's Open Market Committee voted essentially to maintain the status quo that has prevailed since the U.S. central bank first went to zero rates in late-2008.

FOMC members deemed economic activity "expanding moderately" with various sectors seeing some activity. The language, though, was tempered and the various indicators the Fed uses to tip its hand on policy showed little movement.

"I think the Fed is still on the path to raise rates this year," said Marc Chandler, chief currency strategist at Brown Brothers Harriman, adding that, "in the dot plots, they are still looking for two rate hikes this year."

Chandler also said he thinks the Fed is on track to raise rates in September, and that it played up first-quarter weakness while at the same time giving a nod to an improving economy.

Federal Reserve Chair Janet Yellen said in a news conference following the statement's release that the conditions for a rates increase have not been met yet. "It remains the case that the [FOMC] will determine the timing of the initial [rates increase] on a meeting-by-meeting basis, depending on its assessment of incoming economic information."

The euro zone common currency traded about 0.2 percent lower against the greenback immediately after the announcement, but later surged to 0.98 percent higher at $1.1354.

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The dollar index, which measures the dollar against a basket of major currencies, extended its losses from 0.06 percent to 0.91 percent.

Sterling also extended its gains on the day, going from 0.55 percent higher to 1.30 percent higher, or $1.5846, its highest levels since May 15.

The Japanese yen also pared earlier gains, dropping from 124.21 yen to 123.23, or 0.15 percent lower.

Earlier, the dollar strengthened against the yen, buoyed by higher U.S. bond yields.

The dollar also rose against the Australian and New Zealand currencies, which like the yen are especially sensitive to shifts in relative interest rates, but the greenback was off against sterling and the Swiss franc.

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The Greek central bank warned on Wednesday that the country would be put on a "painful course" towards default and exiting the euro zone if the government and its international creditors failed to reach an agreement on an aid-for-reforms deal.

"The implication that a Greek default is getting closer this week has been behind the increased demand for the Swiss franc, and it will remain so unless we get a deal in the next few days," said Jane Foley, senior currency strategist at Rabobank in London.

—CNBC's Jeff Cox contributed to this report.