Dovish Fed sinks dollar, gives euro big boost

New York - The Federal Reserve sent the dollar tumbling on Wednesday with a surprisingly dovish forecast for growth and interest rates, even as it took a solid step toward a midyear rate hike.

After having tempted talk of parity with the euro just three days ago, the dollar whip-lashed from $1.059 per euro to as low as $1.101 when the Fed indicated that rates would rise much more slowly over the next two years than they had forecast in December.

The dollar dropped from ¥121.34 to as low as ¥119.57, before rebounding slightly.