The single European currency was earlier bolstered by a defeat in Dutch elections of far-right leader Geert Wilders, which eased broader fears of a populist drift in European polls this year. The pair has made session high at 1.0646 and hit lows at 1.0604 levels. "The market got the rate hike but not the icing on the cake, which would have been an additional dot plot for this year and that's what the noise has been about today", said OMF private client advisor Stuart Ive.
The New Zealand dollar rallied early yesterday after the Federal Reserve raised the fed funds rate as expected but kept its interest rate track unchanged, signalling two more hikes this year.
Sterling inched lower to $1.2351.
Oil prices rebounded after the International Energy Agency said in its latest monthly report that OPEC crude producing nations were complying with a landmark deal to curb a global supply glut. The Fed's two day policy meeting ends on Wednesday, and may be followed by a series of short term rate hikes this year. Those trades unwound late Wednesday in the U.S.as the Fed indicated it hasn't fallen behind with its efforts to keep inflation in check.
"It is a wait-and-see mood that is mostly prevailing in the market ahead of the Fed's decision", said Shin Kadota, senior currency strategist at Barclays in Tokyo.
Chinese stocks were steady, set for a 1.6 percent increase for the week. Data showed USA producer prices increased more than expected in February as the cost of services such as hotel accommodation pushed higher and the year-on-year gain was the largest in almost five years, pointing to steadily rising inflation pressures.
Overall the FTSE index moved higher ahead of the USA open with narrow ranges prevailing amid low trading volumes.
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At the close, there was a gain of 10.79 points and 0.15% at 7,368.64.
"Policymakers did not accompany the rate hike with the hawkish signals many market participants may have expected and as such, the USA dollar plunged and continued lower during Chair Yellen's press conference [before recovering Thursday]", said Charalambos Pissouros, senior analyst with IronFX Global.
Dow Jones closed down by 0.21 percent, S&P 500 ended down by 0.34 percent, Nasdaq finished the day down by 0.33 percent.
US two- and three-year yields, which are most vulnerable to Fed policy, fell from multi-year highs touched during morning USA trading.
Oil prices rose after six sessions of declines, with the greenback-denominated commodity extending gains as the dollar weakened. Benchmark Brent settled up 1.8 percent to $51.81 a barrel.
USA crude rose 1.9 percent to $48.64 a barrel, after touching a three-month low a day earlier, while benchmark Brent gained 1.5 percent to $51.67 a barrel.
Seoul advanced 0.8 percent, Sydney ticked up 0.2 percent and Singapore was 0.8 percent higher, while there were also big gains in Wellington, Taipei, Jakarta and Manila.