The euro steadied near two-year high against the dollar today after the Federal Reserve held US rates steady, as expected.
The euro rose to above $1.3410 before edging down to $1.3385, holding on to the previous session's 0.5 per cent gains. The euro eased 0.25 per cent at 156.97 yen, after hitting a three-week high of 157.50 in Asia.
Although the Fed said yesterday that inflation was still its main concern, investors took the change in the statement as a sign that a rate cut from 5.25 per cent may be looming and sold the dollar.
Financial futures reacted to show the perception of chances of the Fed cutting interest rates by June briefly rose to 48 per cent from 24 per cent, before easing to 38 per cent.
At the end of Fed's January meeting, the chances of a June cut stood at just 4 per cent.
The dollar fell 0.2 per cent to 117.36 yen. The Australian dollar hit a fresh 10-year high of $0.8087.