"The Fed tripped up the dollar's rally and may have pushed the greenback into a short-term correction with its forecasts for a slower pace of interest rate hikes, strategists say."
The dollar index slumped as much as 3 percent in the worst selloff in six years, after a dovish U.S. central bank on Wednesday pared back its own forecasts for interest rate hikes, cut its outlook for inflation and warned the economy has been moderating.
The euro hit a high of about $1.10 to the dollar, in Wednesday afternoon trading, from a low point of $1.05.
The strong dollar has also fanned fears about deflation, as it pounded commodities markets, like oil and gold and weighed on emerging markets.
Read more: As the dollar fell, stocks rallied and bond yields declined.