The U.S. dollar gained ground against its major counterparts in the early European session on Friday, as investors brought forward their forecasts for a Fed rate hike to 2022 after it indicated an upcoming reduction in the bond buying program.

Nine of the 18 Federal Open Market Committee members favored a rate hike next year, up from seven in the June meeting.

Investors are pricing in a quarter-point rate hike by the end of 2022 following the hawkish Fed statement.

The central bank signaled that it would trim its asset purchase program as soon as November and conclude by mid-2022.

Evergrande worries persisted as some of its offshore bondholders did not get the coupon payment due on Thursday.

U.S. treasury yields spiked up following the Fed's announcement to reduce its bond purchases soon.

The yield on the benchmark 10-year Treasury note rose to 1.432 percent.

The greenback edged up to 1.3702 against the pound, 0.9261 against the franc and 1.1731 against the euro, after falling to 1.3736, 0.9230 and 1.1748, respectively in early trades. The greenback is seen finding resistance around 1.34 against the pound, 0.94 against the franc and 1.15 against the euro.

The greenback approached 110.57 against the yen, its strongest level since August 11. On the upside, 112.00 is possibly seen as its next resistance level. The greenback rose to 1.2698 against the loonie, 0.7043 against the kiwi and 0.7269 against the aussie, up from its prior lows of 1.2641 and 0.7081 and a 1-week low 0.7317, respectively. Next immediate resistance for the greenback is located around 1.29 against the loonie, 0.69 against the kiwi and 0.70 against the aussie.

U.S. new home sales for August will be published in the New York session.

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