Investing.com - The dollar pared gains against the yen on Thursday after Federal Reserve Chair Janet Yellen said that rates will remain on hold for at least the next couple of meetings, but indicated that rate hikes would follow later in the year.
USD/JPY initially hit highs of 119.83 before pulling back to 119.26, still up 0.39% for the day.
In prepared remarks released before her testimony to the Senate Banking Committee, Fed Chair Yellen said it was “unlikely” that economic conditions would warrant an interest rate increase for “at least the next couple of FOMC meetings”.
She added that if the economy keeps improving as the Fed expects it “will at some point begin considering an increase in the target range for the federal funds rate on a meeting-by-meeting basis.”
“It is important to emphasize that a modification of the forward guidance should not be read as indicating that the Committee will necessarily increase the target range in a couple of meetings,” Yellen said.
On the economy, Yellen said growth was expected to be strong enough to result in a further gradual decline in the unemployment rate and added that while overseas risks remain “the recent decline in world oil prices could boost overall global economic growth more than we expect.”
EUR/USD was at 1.1324, off session lows of 1.1288.
The euro found support after Greece’s package of economic reforms was approved by its euro zone creditors on Tuesday, securing Athens an extension of its bailout for another four months.
The package of measures includes taxation and public spending reforms and consolidating pension funds to reduce costs. Athens also pledged not to unwind state privatization programs and to stick to budget targets.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 94.72, little changed on the day.