The dollar index shed 0.6 percent to hit a one-month low on Thursday after the Federal Reserve disappointed investors who had hoped for a clearer signal on when the U.S. central bank will lift interest rates.
Fed Chair Janet Yellen on Wednesday emphasized during the latest meeting that a rate hike was still up in the air and rested squarely on further improvement in the labour market.
In their projections, Fed officials also saw slightly lower rates at the end of 2016 and 2017 than forecast in March and more policymakers were now in favour of hiking rates only once or not all this year.
Overall, the projections for interest rates and the remarks by Yellen were interpreted as being slightly dovish, said Jesper Bargmann, head of trading for Nordea Bank in Singapore.
I recommend trading against the U.S dollar in the medium term picture each time it retraces due to its fundamental weakness.