LONDON, Sept 24 (Reuters) - The dollar retreated against higher-yielding currencies on Thursday as investors shifted funds from the greenback after the Federal Reserve bolstered expectations interest rates will stay very low for a long time.
The U.S. currency pulled back slightly from a 1-year trough against the euro after German business sentiment rose to its highest level in a year in September but undershot forecasts of a stronger advance. [ID:nBEB002457]
The dollar fell against the yen, the traditional funding currency, after it met strong resistance above 91.50 yen, hurt by offers from Japanese exporters back from a three-day market holiday.
Analysts said that in reiterating its pledge to keep interest rates at exceptional lows for a long time after this week's policy meeting, the Fed had sounded less hawkish than some had expected [ID:nN23390829].
"They're keeping policy very, very easy for an extended period. Because of that we've got a bias very much towards more U.S. dollar weakness in the medium term," said Stephen Koukoulas, chief global markets strategist at TD Securities. "On balance, the market reaction to the Fed statement saw an initial knee-jerk jump in the euro, weakness in the dollar, but that's come back a little bit this morning so we are going to be starting to focus on the real economy again."
The Fed said growth had returned to the U.S. economy.
The dollar fell 0.7 percent on the day to 90.64 yen JPY=, having slipped from the day's high of 91.63 yen on trading platform EBS.
RANGE-TRADING
The dollar was seen trapped in a range around 91 yen in the near term as option barriers and bids from Japanese retail margin traders were expected to provide support below 90.50 yen, traders said
