Dollar falls broadly after Fed cuts rate hike projections

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The dollar fell sharply against major currencies after the Federal Reserve kept interest rates unchanged but reduced its expectations for interest rate hikes in 2016 to two from four on Wednesday.

In a statement many investors regarded as more accommodating for looser policy than expected, the Fed noted that moderate U.S. economic growth and "strong job gains" would allow it to resume tightening monetary policy this year but also said the country continues to face risks from an uncertain global economy.

The dollar index, which measures the greenback against a basket of major currencies, fell to a session low of 95.980 after the statement's release. The index stood at 96.837 immediately prior to the statement, falling almost 1 percent in just 11 minutes.

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"The statement was very negative for the dollar," said Alfonso Esparza, senior currency strategist at OANDA in Toronto. "The Fed is actually just seeming soft in comparison to the statements from the (European Central Bank) and other central banks, so we're seeing that coming against the dollar."

The euro reversed earlier losses and climbed to a new session high against the dollar following the Fed's statement. It was last up 1.13 percent at $1.123.

The dollar also fell against the after the Fed's comments, turning negative for the first time in the North American trading session. It was last down 0.73 percent at 112.33 yen.

The FOMC statement was also a major boost to commodity-linked currencies like the Canadian, New Zealand and dollars, which all moved up more than 1 percent against their U.S. counterpart. The three also gained from rising oil prices, which added to their gains after the FOMC statement.

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— CNBC's Jeff Cox contributed to this report.