(Adds details on Fed decision, analyst comment, updates prices)
The U.S. dollar slid on Wednesday, but edged higher from four-week lows, after the Federal Reserve held interest rates steady but signaled that borrowing costs will increase by another 50 basis points by end-December.
The dollar index was last down 0.2% at 103.12 =USD , after hitting four-week lows earlier in the session.
The euro pared gains and was last traded at $1.0822 EUR=EBS , up 0.3%. Against the yen, the dollar fell 0.4% to 139.735 JPY=EBS .
The rate-setting Federal Open Market Committee said, in a unanimous policy statement issued at the end of its latest two-day meeting, "holding the target (interest rate) range steady at this meeting allows the committee to assess additional information and its implications for monetary policy."
U.S. central bank forecasts showed most policymakers believe they will need to tighten monetary policy further.
Officials now expect the fed funds rate to top out at 5.6% this year, implying two more 25 basis point increases in 2023, up from the 5.1% they projected in the last set of forecasts released in March.
"The slowdown of US inflation in May to 4% has provided the Federal Reserve with the confidence to pause rate hikes at the 5%-5.25% range following 10 straight rate increases since March last year," said Srijan Katyal, global head of strategy and trading services at international brokerage firm ADSS, in emailed comments.
"While there are signs that the worst of the inflationary pressures are behind us, Federal Reserve officials have made it clear that rates may yet go higher later this year if inflation remains sticky. On the other hand, if we compare it to the last time interest rates were at 5.25%, it may well be the case that rates remain here for a while."
He noted that in 2006, the fed funds rate stood at 5.25% from July 2006 to August 2007 before being cut in the wake of the global financial crisis.
Traders added to bets, now at nearly 70% the Fed will raise rates again next month after skipping a hike in June. FEDWATCH
======================================================== Currency bid prices at 2:40PM (1840 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index =USD 103.0400 103.3000 -0.23% -0.435% +103.4000 +102.6600 Euro/Dollar EUR=EBS $1.0822 $1.0793 +0.30% +1.03% +$1.0865 +$1.0774 Dollar/Yen JPY=EBS 139.8250 140.2400 -0.27% +6.67% +140.2600 +139.2900 Euro/Yen EURJPY= 151.31 151.33 -0.01% +7.85% +151.5100 +150.9300 Dollar/Swiss CHF=EBS 0.9003 0.9053 -0.54% -2.62% +0.9060 +0.8966 Sterling/Dollar GBP=D3 $1.2657 $1.2612 +0.38% +4.68% +$1.2699 +$1.2601 Dollar/Canadian CAD=D3 1.3329 1.3317 +0.08% -1.63% +1.3352 +1.3272 Aussie/Dollar AUD=D3 $0.6791 $0.6768 +0.33% -0.38% +$0.6835 +$0.6756 Euro/Swiss EURCHF= 0.9743 0.9768 -0.26% -1.54% +0.9772 +0.9731 Euro/Sterling EURGBP= 0.8548 0.8556 -0.09% -3.36% +0.8561 +0.8542 NZ NZD=D3 $0.6199 $0.6150 +0.79% -2.39% +$0.6236 +$0.6144 Dollar/DollarDollar/Norway NOK=D3 10.6600 10.6490 +0.20% +8.72% +10.7290 +10.5280 Euro/Norway EURNOK= 11.5311 11.4811 +0.44% +9.89% +11.6090 +11.4201 Dollar/Sweden SEK= 10.7380 10.6783 +0.49% +3.17% +10.7905 +10.6463 Euro/Sweden EURSEK= 11.5700 11.5137 +0.49% +3.77% +11.5895 +11.5006
