On Thursday, the dollar rose to 14-year highs against other major currencies after the Fed raised interest rates and signaled that it plans to accelerate the pace of raising rates in 2017.
The USD Index, which tracks the greenback against a trade-weighted basket of six major rivals, rose 0.34% to 102.39. Earlier, the index peaked at 102.62, the highest level since January 2003.
The markets were very sure that the Fed would raise the rates, however, the dollar jumped after the US central bank has predicted three raises in 2017 instead of two.
The rate hike strengthens the dollar and makes it more attractive to investors looking for profits.
The dollar hit a 10-month high against the yen: USD/JPY has strengthened by 0.68% to 117.8.
Euro fell 0.31% to 1.0501 after falling to 1.0469 the day before, the lowest level since March 2015.
Euro partially strengthened after the published reports showed that by the end of the year, business activity in the private sector of the Eurozone has maintained a steady growth rate, as the acceleration in the manufacturing sector compensated the slowdown in the service sector.
The pound was also down against the US dollar: GBP/USD lost 0.29% to 1.2528 in anticipation of the decision of the Bank of England on interest rates. The predictions say that the British central bank will leave rates unchanged.
The Australian and New Zealand dollars fell: AUD/USD pair fell 0.16% to 0.7393, and NZD/USD has weakened by 0.51% to 0.7079.
The Fed gave a powerful impetus to buy dollars. The US regulator raised its key rate by 0.25%, and also made it clear that the next year it expects to increase the rate three times. Higher rates traditionally have supported the dollar, raising the appeal of the US assets in the eyes of investors focused on profitability.
As a result, the US currency reached its peak 14 years, putting pressure on emerging market assets.
The strengthening of the US currency is a problem for foreign borrowers which have accumulated trillions of dollar-denominated debt, writes The Wall Street Journal. The debt repayment is more difficult in the national currency when the US currency strengthens.