The dollar was on the back foot on Thursday after the Federal Reserve delivered what some expected to be its last rate hike, while market focus shifted across the Atlantic to the European Central Bank's (ECB) rate decision later in the day.

The Fed on Wednesday raised interest rates by a quarter of a percentage point, as expected, marking the central bank's 11th rate increase in its last 12 meetings.

While Fed Chair Jerome Powell left the door open to another hike in September, traders were unconvinced, sending the U.S. dollar broadly lower.

The dollar index was last 0.04% lower at 101.06, away from a two-week top of 101.65 hit earlier in the week, though its losses were muted as money markets had already priced in Wednesday's 25-basis-point increase.

Sterling steadied at $1.2935, having eked out a slight gain against the dollar in the previous session.

The ECB comes under the spotlight next, with investors expecting the central bank to similarly raise rates by 25 bps at the conclusion of its monetary policy meeting later on Thursday, with focus on its forward guidance.

Ahead of the rate decision, the euro firmed at $1.1083.

Elsewhere, the Japanese yen remained under pressure and fell more than 0.1% to 140.43 per dollar ahead of the Bank of Japan's monetary policy decision on Friday, where it is seen maintaining its ultra-loose policy stance.

BOJ Governor Kazuo Ueda was quoted as saying at a key government meeting on Wednesday that the central bank will maintain accommodative monetary conditions for companies.

The kiwi rose 0.27% to $0.6226, while the Australian dollar gained 0.14% to $0.6769.

Source : Reuters