The euro jumped on Thursday, rising to a one-month peak against the dollar on a German newspaper report that creditors would extend Greece's existing aid program until year's end, before fading after officials denied those reports.
The euro touched a session high of $1.1436 against the dollar, its best since May 18, before easing back. It last traded at $1.1374, up 0.34 percent for the day.
The euro was also up 0.10 percent against sterling, before easing.
A German newspaper Die Zeit report on Thursday about possible concessions made to Greece by its international creditors was dismissed by European Union diplomats, who told Reuters that such a proposal meant to avoid a looming Greek debt default "would definitely not fly."
The dollar index was down 0.3 percent in a second day of losses since the Fed on Wednesday trimmed economic growth forecasts and gave no clear signal on when it will hike interest rates for the first time in nearly a decade.
Jumps in gasoline prices helped lift the U.S. Consumer Price Index 0.4 percent last month after it rose 0.1 percent in April, according to the Labor Department. But the rise was shy of forecasts.
So-called core CPI, which strips out food and energy costs, increased 0.1 percent, the smallest rise since December, after advancing 0.3 percent in April.
"The market was looking for blow-out numbers and didn't get them," said Kathy Lien, managing director of FX strategy for BK Asset Management in New York. "The market continues to be disappointed by yesterday's FOMC rate decision."
In their projections, Fed officials saw slightly lower rates at the end of 2016 and 2017 than forecast in March. More policymakers now favored raising rates only once or not all this year.
Overall, the projections for interest rates and the remarks by Fed Chair Janet Yellen were interpreted as dovish, analysts said.
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"Leaving (projections for interest rates) for this year unchanged but seeing an increasing number of policy makers advocating only one move leaves the market guessing if the Fed may start hiking in September or December," Morgan Stanley analysts said in a note.
Sterling added to recent gains against the dollar, rising to a seven-months high of $1.5930 on Thursday, after rising sharply on Wednesday with better than expected British wage growth.
The Swiss franc rose after the Swiss National Bank kept interest rates unchanged at -0.75 percent and slightly tweaked its inflation forecasts. The dollar was last slightly higher against the franc.