The dollar hit a 3-1/2 week high against a basket of currencies today after the Federal Reserve surprised markets with a more hawkish policy tone and signalled its confidence in the U.S. economic recovery. The Fed released a statement that underscored the improving U.S. labour market, dismissing recent financial market volatility, European growth challenges and largely weak inflation outlook. While the central bank said interest rates would remain low for a “considerable time,” the Fed’s statement helped to push up U.S. yields and increased the greenback’s appeal. The yield on benchmark 10-year Treasury notes stood at 2.310 percent in Asian trade, after spiking to a three-week high of 2.362 percent on Wednesday. The dollar index rose to 86.30 , its highest level since October 6, in the wake of the Fed’s announcement. The euro touched a 3-1/2 week low of $1.2586 and last traded at $1.2605, down 0.2 percent on the day. Technically speaking, the euro broke down its 50, 100 and 200-4hour moving averages which are signs of weakness. The euro changed its trend from sideways to down on 4-hour chart. Current support lies at 1.2500$, second support is 1.2431$ and the main support lies at 1.2241$.The recent price peak failed to reach the middle boundary of the Bollinger Bands which confirms the price weakness. The RSI indicator broke down its oversold area which is also a sign of weakness. The stochastic indicator broke down its middle line which signals more losses. On the upside, Current resistance stands at the area between 1.2603$ & 1.2639$, second resistance is in the area between 1.2770$& 1.2930$ and the main resistance stands at 1.3029$.