By Kevin Buckland

TOKYO (Reuters) -The U.S. dollar was steady early on Thursday following its plunge to a 3-1/2-year low and then forceful rebound as traders grappled with the ramifications of the Federal Reserve’s measured rhetoric on further interest rate cuts.

The Fed reduced rates by a quarter point on Wednesday, as expected, and indicated it will steadily lower borrowing costs for the rest of this year, initially sending the dollar plunging.

However, Fed Chair Powell characterised the day’s policy action as a risk-management cut in response to the weakening labour market, but the central bank does not need to rush easing.

The Fed’s closely watched dot plot of policy expectations predicted a median 50 basis points of additional cuts over the remaining two policy meetings this year,

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