NEW YORK, US - The Federal Reserve's upbeat outlook for the US economy fueled a rebound for the dollar Wednesday even though the central bank steered clear of any hint on raising interest rates.

Analysts said that the Fed's more optimistic assessment of conditions was enough to lift the greenback by suggesting that the US central bank is closer to an "exit strategy" from a massive stimulus effort and record low rates.

The euro fell to 1.4533 dollars (S$2.0324) from 1.4534 dollars in New York late on Tuesday, reversing course after the Fed statement concluding its two-day policy meeting.

The dollar rose to 89.77 yen (S$1.3914) from 89.67 yen on Tuesday.

The Fed held its base federal funds rate at a record low range of zero to 0.25 percent and said this policy would likely remain in effort for "an extended period," a move that was widely expected.

But the central bank also affirmed that it would wind down an array of emergency lending programs and allow its trillion-dollar liquidity effort to run its course.

Kathy Lien at Global Forex Trading said the Fed "has continued to lay the groundwork for unwinding their emergency programs, driving the US dollar higher against all of the major currencies."

Lien said the Fed's more optimistic assessment of the labor and housing markets as well as consumer spending suggested that the US economy is gathering momentum even if there is no clear indication of an early rate increase.

"Their upgraded assessment of the labor market, income growth, household spending and financial market conditions reinforced the dollar-bullish sentiment that has been seeping into the markets," Lien said.

"By acknowledging the improvements in the economy and in turn downplaying the risks, the Federal Reserve has given dollar bulls the green light to charge forward. We believe that the recovery in the dollar should last for the remainder of the year."

Brian Wesbury at First Trust Portfolios said the Fed has begun preparing for higher rates by agreeing to wind down the various emergency lending programs without extending or expanding them.

"Given our forecast that the unemployment rate will decline more than the Fed anticipates in 2010 and underlying inflation trends will continue to accelerate we think today's statement is consistent with higher short-term interest rates starting in the spring or early summer," Wesbury said.

US data was also positive on Wednesday, with home starts and construction permits rising strongly in November while consumer prices were up 0.4 percent, in line with forecasts, offering more evidence of an economic rebound.

In late New York trade, the dollar stood at 1.0381 Swiss francs (S$1.3937) from 1.0404 Tuesday.

The pound was at 1.6335 dollars (S$2.2845) after 1.6265.