(Updates prices, adds comment)
* Dollar falls to multi-week lows against major currencies
* Dutch election positive for euro
By Gertrude Chavez-Dreyfuss
NEW YORK, March 16 The dollar dropped to a
five-week low against a basket of currencies on Thursday, still
reeling from the previous session, when a statement from the
U.S. Federal Reserve failed to signal a much faster pace of
monetary policy tightening.
The Fed on Wednesday lifted the target overnight interest
rate by 25 basis points to a range of 0.75 percent to 1.00
percent, but stuck to its original forecast of three rate
increases this year. Investors were expecting four rate hikes in
The dollar on Thursday slid to a two-week-low against the
yen, and a six-week trough versus the euro.
But James Chen, head of research at Forex.com in Bedminster,
New Jersey, said the dollar's weakness should be short-lived.
"Projections for the path of Fed rate hikes are essentially
the same as they were in December and could very well accelerate
at any time in reaction to expected fiscal policies and
inflation pressures," said Chen.
"Therefore, it remains unlikely at this point that a new
bearish trend has begun for the dollar."
U.S. homebuilding increased 3.0 percent last month and
jobless claims fell in the latest week, data showed on Thursday,
signs the economy remained on solid ground and helping to make
the case for multiple rate hikes this year.
In late trading, the dollar index fell 0.4 percent to 100.37
. It slid to as low as 100.35, its weakest level since Feb
9. Against the yen, the dollar slipped to 113.28 yen, down 0.1
percent, after earlier falling to a two-week trough.
Chicago-based Ron Waliczek, managing director of
over-the-counter FX and interest rates at INTL FCStone, said
going into Wednesday's Fed decision, the dollar had been
overdone and had been so since 2014.
If ever there was a time when the dollar would consolidate
and move lower, Wednesday provided the perfect opportunity as
the market built in expectations of a more aggressive rate-hike
pace, he said.
The euro rose to a six-week high against the greenback and
was last at $1.0751, up 0.2 percent.
The single European currency was earlier bolstered by a
defeat in Dutch elections of far-right leader Geert Wilders,
which eased broader fears of a populist drift in European polls
Sterling, meanwhile, rose on some surprise hints about the
chances of a rise in UK interest rates. The pound hit a
two-week high of $1.2373, after the Bank of England kept rates
on hold but gave a handful of hints in voting results and its
minutes that it might raise them soon.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrea