* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh (Recasts with Fed announcement, adds analyst quote, updatesrates)
By Kate Duguid
NEW YORK, Nov 8 (Reuters) - The U.S. dollar strengthenedagainst the euro on Thursday after the Federal Reserve heldrates steady as expected, and said strong jobs and spending keptthe economy on track, setting up for a rate hike in December.
The euro EUR= was down 0.46 percent on the day against thegreenback, which had risen ahead of the announcement.
"The dollar had rallied into the statement, so it's notclear how much more juice it will get with the Fed coming in asexpected," said Boris Schlossberg, managing director of foreignexchange strategy at BK Asset Management in New York.
Against the euro, the dollar initially weakened as analystssaid traders fixated on the slightly dovish comment thatbusiness investment had "moderated from its rapid pace earlierin the year," which could act as a possible drag on futureeconomic growth. But it soon rebounded as "apart from that theyhave not signaled any warning signs at all," said Schlossberg.
The gains against the yen were less notable, with the dollarat roughly the equivalent to 113.91 yen, down from the day'slow, but still weaker than the peak hit earlier at 113.46 JPY= . The dollar has gained over the past week against the yendue to divergence in the monetary policies of the U.S. Fed andthe Bank of Japan.
Against a basket of six rival currencies, the dollar indexwas up 0.6 percent from late Wednesday .DXY . The index hadfallen in the wake of the U.S. midterm elections, which splitpower between the two houses of Congress. Democrats' control ofthe House of Representatives suggests they will act as a checkon President Donald Trump and could block further tax cuts andderegulation.
The greenback has rallied this year since the president'sRepublican Party pushed through significant tax cuts, and strongeconomic growth has prompted the Fed to steadily raise interestrates.
Earlier on Thursday, the euro fell after the EuropeanCommission cut its forecasts for Italian growth, adding toinvestor concerns about Italy's debt and economic outlook. (Reporting by Kate Duguid;Additional reporting by Tommy Wilkes in London; Editing by LisaShumaker) ((email@example.com; +646-223-6118; ReutersMessaging: firstname.lastname@example.org @thomsonreuters.net))