Dollar slide continues after Fed's Bernanke speaks

NEW YORK (Reuters) - The U.S. dollar fell against the euro and most other major currencies on Wednesday after the Federal Reserve said it will end its bond-buying program in June as planned and appeared in no rush to tighten monetary policy further.

The dollar was already at a three-year low against major currencies on Wednesday and gained no traction from a press conference by Federal Reserve chairman Ben Bernanke where he forecast weaker U.S. growth in the first three months of 2011, though he attributed it to transitory factors. It was the first regularly scheduled news briefing by a Fed chief in the central bank's 97-year history.

"The communique from the FOMC was little changed and he really just reiterated that" in his press conference, said Gareth Sylvester, senior currency strategist at San Francisco-based Klarity FX. "It's status quo"

The Fed's easy money policy has contributed to the slide in the U.S. dollar, with higher interest rates in Europe and some other developed countries attracting funds into other currencies.

Low U.S. interest rates, combined with slow economic growth and a large federal budget deficit, have resulted in the dollar losing around 10 percent of its value against a broad measure of major currencies since its January peak. Credit rater Standard & Poor's changed its outlook on the AAA U.S. sovereign debt rating to "negative" from "stable" last week.

The dollar .DXY skidded to a three-year low of 73.284 as measured by the InterContinental Exchange's dollar index .DXY, down around 10 percent from its peak in January, and many traders expect the index to fall to the all-time low, hit in July 2008, of 70.698. It last traded down 0.7 percent at 73.301.

The euro was up 1.0 percent at $1.4785 after reaching $1.4791, its highest since December 2009. Traders said Asian and Middle East sovereign accounts were looking to buy the euro on every dip.

"Rate differentials are working firmly against the dollar, we are in a 'risk-on' environment and general dollar sentiment is overwhelmingly bearish," said Greg Anderson, G10 strategist at CitiFX in New York. "The Fed would have to turn substantially hawkish for the dollar to reverse course."

The Fed also said it expects full-year U.S. gross domestic product growth to range between 3.1 percent and 3.3 percent, compared to an earlier 3.4-3.9 percent forecast.

Yield differentials, however, favored the dollar over the yen, with Japan's central bank expected to keep interest rates low, perhaps longer than the Fed. The yen was one of the few currencies against which the dollar managed to gain, climbing 0.7 percent at 82.03 yen.

The yen came under pressure on Wednesday after S&P downgraded its ratings outlook on Japan's sovereign debt. It warned the huge cost of last month's devastating earthquake would hurt already weak public finances unless the government raised taxes. The euro jumped 1.6 percent to 121.30 yen.

Sterling also remained at its highest since December 2009 against the greenback after an in-line reading of first-quarter UK growth, with investors who had sold the pound on anticipation of a softer figure being forced to buy it back.

The pound last traded at $1.6629, up 0.9 percent. Earlier in the global day, data showed the UK economy expanded 0.5 percent in January-March from the previous quarter.

The Swiss franc scaled its strongest point on record against the dollar while the Australian dollar shot up to another post-float high. The aussie was floated in December 1983.

Australian first-quarter core inflation data revived expectations for higher Australian interest rates.