Investing.com - The dollar backed off four-month highs against a currency basket on Thursday, but remained supported after the Federal Reserve indicated that it is on track to keep gradually raising interest rates, including at its June meeting.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, eased 0.15% to 92.45 by 03:43 AM ET (07:43 AM GMT) holding below Wednesday’s highs of 92.66, which was the strongest level since December 28.
The Fed, in a statement released after its two-day policy meeting acknowledged a recent pick-up in inflation, but gave no indication that it will accelerate the pace of rate increases in response.
The statement did little to alter market expectations that the Fed will deliver its second rate increase of the year when it meets in June.
Markets were turning their attention to Friday’s U.S. employment report for April, which could provide further signs of strength in the world's largest economy.
The dollar edged lower against the yen, with USD/JPY sliding 0.15% to 109.67, down from the three month high of 110.03 reached on Wednesday.
The euro rebounded from four month lows, with EUR/USD climbing 0.36% to 1.1992.
Investors were looking ahead to euro zone inflation data later in the day which was expected to indicate that underlying inflation slowed last month.
The pound also pulled back from four month lows against the dollar, with GBP/USD rising 0.24% to 1.3609 ahead of an update on the health of the dominant UK service sector later Thursday.
Investors have slashed expectations for a rate hike from the Bank of England at its upcoming meeting next week after recent weak economic reports.
Meanwhile, the Australian dollar gained ground, with AUD/USD rising 0.43% to 0.7524 after falling to an 11-month low overnight.
The New Zealand dollar was also higher, with NZD/USD up 0.36% to 0.7019, recovering from Wednesday’s lows of 0.6983, which was the weakest since December 20.