The dollar extended its losses on Thursday, hitting a new two-year low against the euro after the Federal Reserve held interest rates steady and dropped a reference in its post-policy meeting statement to possible further rate hikes.

Although the Fed said after its Federal Open Market Committee meeting that inflation was still its main concern, investors took the change in the statement as a sign that a rate cut may be near.

EURUSD traded between 133.82/134.12

Nikkei hits 3 week high

The Nikkei average rose to its highest in three weeks on Thursday with a wide range of blue-chip shares such as Sony Corp. rising on growing optimism about the U.S. economic outlook following gains on Wall Street.

The Nikkei was up 1.70 % or 292.27 points at 17,455.47 by the end of the morning session, its highest since March 1 St.