The dollar slid on Wednesday after the Federal Reserve held interest rates unchanged and kept the level of its monthly bond-buying program intact, as expected, but acknowledged the improvement in the U.S. economy.
Fed Chair Jerome Powell also said in remarks after the central bank statement that it was not the time to talk about tapering its asset purchases.
The greenback had rallied in conjunction with the rise in U.S. Treasury yields on the view that a successful vaccination program and strengthening economic data would prompt the Fed to talk about reducing its bond purchases sooner rather than later. U.S. 10-year yields though rose to 1.641% after the Fed statement.
"The path of the economy will depend significantly on the course of the virus, including progress on vaccinations," the Fed said.
"The ongoing public health crisis continues to weigh on the economy and risks to the economic outlook remain." In early afternoon trading, the dollar fell 0.4% to 90.551.
The euro rose 0.3% to $1.2128, while the dollar slipped 0.1% against the yen to 108.63 .
"The Fed offered no hints that it was considering slowing the pace of its asset purchases, let alone thinking about raising interest rates," said Paul Ashworth, chief U.S. economist at Capital Economics in a note sent after the Fed statement.
"As it stands, there is nothing here to change our view that the Fed won't begin to taper its monthly asset purchases until the start of next year and won't begin to raise interest rates until late 2023."
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