The dollar firmed against the euro in Asian trading on Thursday, with EUR/USD dipping 0.02% and trading at 1.3104.
At a Federal Open Market Committee meeting on Wednesday, the Federal Reserve concluded that interest rates, currently at a very low 0.25%, will likely stay that way through 2014, longer than a forecast made towards the end of last year through 2013.
The economy, Fed policymakers concluded, needs loose monetary policy in order to recover.
"While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed," the Fed said in a statement.
While the Federal Reserve does not plan to roll out a third round of quantitative easing to stimulate the economy even further, which would weaken the dollar, it won't rule out such a measure at this time either.
"The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability."
Quantitative easing involves the Federal Reserve stepping in and buying assets from banks with the aim of flooding the financial system with liquidity to spur more robust growth and avoid deflation.
The news out of Washington served as the greenback's chief steering current, overshadowing reports that minutes from the Bank of England’s latest policy meeting revealed policymakers worry the country was still facing headwinds from global uncertainty, while in Japan, news broke that the country recorded its first annual trade deficit in 31 years last year due to a strong yen and sluggish demand abroad for Japanese goods and services.
Meanwhile, the dollar was down slightly against the pound, with Cable rising 0.02% to hit 1.5659.
The greenback was down 0.06% against the yen, with USD/JPY trading at 77.74, and up against the Swiss franc, with USD/CHF rising 0.02% to 0.9218.
The greenback was down against its cousins in Canada, Australia and New Zealand, with USD/CAD falling 0.06% to 1.0038, AUD/USD up 0.11% at 1.0609 and NZD/USD up 0.07% at 0.8174.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.03% at 79.61.
Later Thursday, markets will await U.S. durable goods orders, initial jobless claims and new homes sales, while consumer confidence figures come out of Germany.
In Japan, inflation and retail sales figures will publish as well.
The World Economic Forum continues its meeting in Davos, Switzerland, and markets will await comments from policymakers or financial and corporate leaders on the U.S. and European economies.
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