The greenback relinquished its strength against the majors in the Friday session, sliding back toward the 1.36-figure versus the euro and slumping to 1.0391 against the Loonie. The US equity bourses recouped its earlier losses to trade largely flat by afternoon trading while crude oil edged up closer to the $80-per barrel level. Markets quickly digested the FOMC's unexpected announcement yesterday afternoon to lift its discount rate from 0.5% to 0.75% with Asian equity bourses selling off overnight and propping up risk-averse currencies. However, the dollar's gains were short-lived as traders took profits ahead of the weekend.

The economic released earlier in the session saw consumer prices in January print lower than expected with the headline figure at 0.2% m/m and 2.6% y/y. The core CPI readings fell by 0.1% on a monthly basis and up by 1.6% on an annualized basis.

Federal Reserve officials were quick to reassure markets that the FOMC was removing emergency liquidity rather than embarking on a quantitative tightening cycle. NY Fed Bank President Dudley said the action yesterday was really an action about the improvement in banks and is not at all a signal of any imminent tightening. He added that with little inflationary pressure in the US, the Fed's focus has to be on growth and jobs.

EURUSD edged back toward the 1.36-mark with interim resistance seen at 1.3640, followed by 1.3670 and 1.37. Additional ceilings are eyed at 1.3750, backed by 1.38 and 1.3840. On the downside, support starts at 1.3560, backed by 1.3530 and 1.35. Subsequent floors are seen at 1.3470, followed by 1.3440 and 1.34.