Investing.com -- EUR/USD surged above 1.14, reaching its highest closing level in the month of September, after the Federal Open Market Committee held its benchmark interest rate at its current near-zero level upon the completion of its two-day meeting on Thursday afternoon.
The currency pair wavered between a low of 1.1285 and a high of 1.1441, before settling at 1.1432, up 0.0141 or 1.27% on the session. The euro last closed above 1.14 against the dollar on August 25, one day after soaring more than 2% amid a massive sell-off on global equity markets. Over the last month of trading, the euro is now up by nearly 3% on its American counterpart.
EUR/USD likely gained support at 1.1130, the low from Sept. 9 and was met with resistance at 1.1713, the high from Aug. 24.
Citing the negative effects of global economic weakness on U.S. inflation, the FOMC voted to leave its benchmark Federal Funds Rate at its current level between zero and 0.25% on Thursday. Nearly a decade has passed since the U.S. central bank has last raised short-term rates.
"Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term," the FOMC said in a statement.
Adopting a relatively dovish stance, Fed chair Janet Yellen said the U.S. central bank will begin monetary policy normalization when it has seen "further improvement in the labor market," and it is "reasonably confident" that inflation is moving toward its targeted goal of 2%. Yellen also noted that large drags from falling energy and import prices should dissipate in the near future allowing long-term inflation to move back toward its long-term target.
Still, the Fed downgraded its median inflation forecasts at the meeting to 0.3% for the end of 2015, while lowering inflation expectations for the end of next year to 1.7%. The Fed now expects that inflation will not reach its 2.0% target until 2018.
The Fed also lowered its median forecasts for the Fed Funds Rate for the end of the year to 0.4%, from previous estimates of 0.6%. A bevy of short-term rates such as debt for credit card holders are pegged to the benchmark, which banks use to lend to other institutions on overnight loans. The Fed also lowered its rate forecasts for 2016 and 2017 to 1.7 and 1.9% respectively, representing a decline of 0.1% for each year.
In addition, the Fed said four of its members do not see a rate hike occurring in 2015, up from two in June. One member of the FOMC, Richmond Fed president Jeffrey Lacker, dissented, recommending a 0.25% interest rate hike at the meeting.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell to a three-week low at 94.48, before closing at 94.56, down more than 1%. A rate hike by the Fed is expected to bolster the value of the dollar, as foreign investors look to capitalize on higher yields.