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EghtesadOnline: The dollar fell to its lowest in a week against the euro but recovered some ground against the yen on Thursday after the U.S. Federal Reserve meeting balanced hints of a rise in interest rates this year with cuts in the longer term outlook.

On balance the Fed's message on Wednesday did not go as far as some in currency markets had expected towards outright promising a rise in borrowing costs by the end of the year, reports Reuters.

Allied to a reduction in the number of rate rises it forecasts in 2017 and 2018, that was enough to knock the greenback to a nearly 4-week low of 100.10 yen in Asian trading.JPY=EBS

But there were also three votes for a rise in rates on the Fed's policymaking committee and that helped bring the dollar back into positive territory on Thursday, up 0.4 percent from Wednesday's close in New York at 100.73 yen.

"The announcement constitutes a 'hawkish hold'," said Kit Juckes, a strategist with Societe Generale in London.

The euro gained 0.4 percent to $1.1229, its highest since Friday and taking it firmly back into the middle of a $1.09-$1.15 range it has held since March. EUR=EBS

Analysts from another major French bank, BNP Paribas, also recommended selling the yen and buying the dollar in expectation of a December rise in rates.

A stronger yen has been the most consistent trade of the past year among major currencies, backed since January by the growing conviction that the Bank of Japan is running out of ammunition to weaken the currency and get inflation rising.

Wednesday's policy overhaul by Tokyo does not appear to have shifted that conviction, although the reaction to its shift to targeting yields on government bonds has been volatile and opinions differ widely on its implications.

"You have some people saying that it is the end of quantitative easing and others that it is a stepping stone towards a number of new measures," said Richard Benson, co-head of portfolio investment at Millennium Global in London.

"If it is just the first step, the second may be too far away to start trading right now. But you would only need one ... story about issuing (government bonds) into the 10-year (area) to change that."

If the Bank of Japan is going to keep 10-year yields at zero percent, then any issuance by the government of that duration would come at zero cost, and likely be swallowed substantially by continuing central bank buying - adding up to direct financing of the budget that has been speculated for months.

Benson said the market was now looking for a new story to play in the weeks ahead - with the U.S. presidential election potentially top of the list. The first Clinton-Trump debate is on Monday.

Officials from Japan's finance ministry, Financial Services Agency and the Bank of Japan, also met on Thursday to discuss issues in global financial markets.

Jasslyn Yeo, global market strategist for JP Morgan Asset Management in Singapore, believes the dollar would probably head lower against the yen going into the year-end, and expects the greenback could soon fall below its August low of 99.55 yen.

"Yesterday's new (BOJ) framework is not new easing. I think it more represents a softening stance towards banks and other financial institutions likely due to concerns and backlash over profitability and financial stability," Yeo said.

Dollar Federal Reserve US interest rates