The dollar fell against the euro in volatile trading Wednesday after the Federal Reserve gave mixed messages about the state of the U.S. economy.
The Federal Reserve said in a statement that the economy is slowly improving, but Fed Chairman Ben Bernanke said in a press conference that he would still consider another round of bond-buying to help the economy.
"These conflicting comments triggered erratic moves in the U.S. dollar as investors tried to understand where the central bank stands on monetary policy," Kathy Lien, director of currency research for the currency trading company GFT, wrote in a note to clients.
The euro rose to $1.3230 in late trading Wednesday from $1.3189 late Tuesday.
The dollar rose against the dollar after the Federal Reserve released a statement after its two-day policy meeting without mentioning new steps to help the economy. But the dollar fell against the euro after Bernanke said more bond purchases remain "very much on the table." Bernanke made his comments during a press conference later Wednesday.
The Fed has launched two rounds of bond purchases, most recently in August 2010, to lower long-term interest rates and make stocks more attractive to investors.
Lower interest rates can weigh on a currency by reducing the returns investors get from holding it. With a third round of bond-buying still an option, traders sold dollars.
In other trading Wednesday, the British pound fell to $1.6182 from $1.6133. The dollar fell to 0.9081 Swiss franc from 0.9110 Swiss franc and to 98.29 Canadian cents from 98.87 Canadian cents.
The dollar rose to 81.29 Japanese yen from 81.26 yen.