The dollar gained a little ground following the Federal Reserve's decision to leave its monetary policy settings on hold on Wednesday after the central bank acknowledged inflation had increased in recent months.
Janet Yellen chaired her final open market committee meeting at the Fed before Jerome Powell takes over next week and left the main Fed funds rate at 1.5% and all other policy settings intact.
In the accompanying statement the FOMC said it expected that "with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labour market conditions will remain strong".
It added, that market-based measures of inflation had increased in recent months, but that they remained low. Meanwhile, survey-based measures of longer-term inflation expectations were little changed.
The Fed reiterated its familiar message that the committee expects that "economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate", but that the rate would likely remain below normal levels for some time to come and would depend on incoming economic data.
March rate hike
Many analysts believed that Yellen's final act would be to prime the markets for a quarter-point rate hike in March. That, of course, will depend on incoming chair Jerome Powell, who takes his seat on Monday.
Ian Shepherdson, chief US economist at Pantheon Macroeconomics, said: "In short, the statement sets up the March hike, which will be followed by Jay Powell's first press conference. We're expecting continuity of approach, at least for a while."
Certainly, the reaction of the dollar appeared to signify expectations of a March move.
Having spent much of the trading session lower, the dollar climbed 0.1% versus the euro to $1.2398 following the Fed decision. The dollar was up 0.53% to Y109.35 against the Japanese yen and regained some ground against sterling, but remained 0.08% lower at $1.4161.