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Dollar whipsaws after Fed leaves rates unchanged

The U.S. dollar traded in a range Wednesday, after the Federal Reserve kept interest rates unchanged.

The dollar index briefly popped about 0.2 percent higher, before holding 0.1 percent lower, at 94.48.

The euro briefly turned lower but was last up 0.1 percent, at $1.1311. Against the yen, the dollar added 0.2 percent, to trade at 111.55.

EUR/USD in last 5 days

The Fed was expected to leave rates unchanged as it continues to monitor the impact from weakening global growth, but some analysts said the central bank could alter its language to highlight reduced global risks.

"Economic activity appears to have slowed," the Federal Open Market Committee said in a statement released after its two-day meeting this week. "Growth in household spending has moderated, although households' real income has risen at a solid rate and consumer sentiment remains high."

The statement highlighted the many conflicting signs in the U.S. economy – consistent job growth and an improving housing market against slowdowns in business investment and exports.

Higher U.S. rates generally boost the dollar by driving investment flows into the United States.

Fed Chair Janet Yellen told reporters after the last policy meeting in March that "caution is appropriate" when it comes to raising rates, and she highlighted the challenges to the global economy.

Currency strategists at Scotiabank also noted the potential for a hawkish surprise, and wrote in a research note before the announcement: "We look to a moderation in the degree of Fed caution and expect broad USD support in response to this shift."

Analysts said uncertainty surrounding the outcome of a Bank of Japan policy statement on Thursday was keeping the dollar mostly stable against the yen.