In contrast to the Fed, the European Central Bank left its interest rates steady at two percent, as expected. The bank will hold a news conference at 1330 GMT.
Investors are jittery ahead of Friday's release of key US jobs data and a speech by Fed chief Alan Greenspan on the current account as well as the meeting of G7 rich nations and emerging economies on Friday and Saturday.
At 1310 GMT the dollar traded a third of a percent up on the day at $1.3035 per euro.
The dollar has gained more than six cents against the euro since hitting a record low in late December as rate hike expectations helped offset worries about US current account and budget deficits.
It was also up 0.6 percent at 104.23 yen.
The yen fell broadly as Japanese investors bought the single currency for their purchases of euro-denominated bonds.
The dollar hit three-month highs versus the Swiss franc, driven also by weaker than expected inflation data in Switzerland.
The euro zone's dominant service sector expanded at its fastest pace in three months in January, according to a survey of some 2,000 companies.
The concentration of events towards the weekend has left major currencies trading in a tight range this week.
A speech on the current account on Friday by Fed chairman Alan Greenspan is one focus as President George W. Bush offered no details about his plans to cut the budget deficit in his State of the Union address on Wednesday.
"The Fed's statement was the same as the last one...they are just content to keep raising interest rates," said Ian Gunner, head of foreign exchange research at Mellon Bank in London.
G7 finance ministers and central bankers meet in London from Friday but officials have suggested the group will not change its previous comments about the need for flexible FX regimes.