The greenback rose on Wednesday to a six-month high against the single currency and strengthened versus the yen after the Federal Reserve kept target rates unchanged at 0.25% and restated its intention to cease buying mortgage-backed securities in March, making U.S. assets more attractive. Also, The Fed reiterated that interest rates will stay low for an “extended period”

Worries about Greece kept the euro under pressure on Wednesday with the spread of the 10-year Greek bond yield over benchmark German Bunds hitting its widest since Greece adopted the euro currency in 2001. Despite a brief pullback to 1.4087 after European Central Bank Governing Council member Axel Weber said ECB will not set eurozone interest rates to suit the block's few troubled members and indicated Greece has promised to reduce deficit to 3%, price tumbled from there. Euro reached 6-month low of 1.3993 after the Fed kept rates unchanged.

Despite early drop to a 6-week low of 89.14 in Asia on concerns about China curbing lending together with early comments by Geithner that 'U.S. government still exposed to substantial risk of losses on AIG investment', the greenback rebounded strongly against the yen in European morning on short-covering. The rally picked up more momentum and reached intra-day high of 90.09 after the Fed kept rates unchanged.

RBNZ announced its decision to keep Cash Rate unchanged at 2.5%, and Governor Allan Bollard stated its intention to remove monetary stimulus measures around mid-year as he observed that new Zealand's Economy is recovering despite a higher level of uncertainty. New Zealand dollar initially fell to 0.7030 after the news but staged a rebound above 0.7067 afterwards.

Data to be released on Thursday include Japan retail sales, Germany unemployment rate, U.S. durable goods and jobless claims.