The U.S. dollar strengthened on Thursday after the Federal Reserve left interest rates unchanged but signalled further rate hikes to come this year as attention turned to the European Central Bank policy announcement later in the day.

The Fed's policy decision snapped a string of 10 consecutive rate hikes, but the projections, or dot plot, showed policymakers expect two more increases by the end of 2023. Chair Jerome Powell said rate cuts in 2023 would not be appropriate.

By 10.26 GMT, the dollar index , which measures the currency against a basket of currencies, was up 0.2% at 103.09, recovering from a four-week low of 102.66 on Wednesday.

The euro was last flat versus the dollar at $1.0841 after touching a four-week high of $1.0865 on Wednesday.

Money market traders are expecting the ECB to raise the deposit rate by 25 basis points, with a further quarter-point hike seen in July.

The yen plunged as much as 1% to 141.50 per dollar, a level not seen since Nov. 23 last year, with analysts on the lookout for further signs of currency intervention.

Source : Reuters