* Dollar at session lows versus euro and yen on Q1 GDP
* Euro zone inflation up in April, but less than forecast
* Little impact on dollar from Fed holding rates steady, more tapering
* Yuan weakens, dealers eye implications for euro (Updates with U.S. Federal Reserve decision)
By Daniel Bases
NEW YORK, April 30 (Reuters) - A surprisingly weak first-quarter read on the U.S. economy sent the dollar careening lower on Wednesday against the euro and the yen.
Those losses persisted after an expected decision by the U.S. Federal Reserve to maintain its 0-0.25 percent interest-rate policy. The Fed stayed on course with further cuts to its bond buying program, aimed at bolstering economic activity, to $45 billion a month.
The U.S. economy picked up recently after adverse weather played a role in slowing it down, the Fed said.
“On the one hand they were upbeat about the prospects for the economy but that inflation remains a concern. All in all the Fed remains on a steady path to wind down bond buying, but questions still remain on when the economy might be healthy enough endure a rate hike,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, DC.
An earlier report showed euro zone inflation increased albeit at a lower than expected pace. Inflation running below target gives the European Central Bank room to print money, but the data dampened slightly the expectation of the presses will run imminently.
A stronger-than-expected ADP private sector U.S. employment report pushed the greenback higher, only to see it undermined by the paltry 0.1 percent growth rate in first-quarter U.S. gross domestic product. Economists had forecast a 1.2 percent GDP increase.
U.S. Midwest business activity in April rose more than expected but barely registered in the markets.
The euro was off an earlier three-week low to trade up 0.41 percent to $1.3868, near the session high $1.3876.
Investors sold the dollar to 102.19 yen, a loss of 0.41 percent.
The debate over the scale of disinflation in Europe has dominated markets this week, and lower-than-expected April price growth in the euro zone of 0.7 percent initially sent the euro to a three-week low against the greenback.
The Chinese yuan dropped to an 18-month low against the greenback, finishing at 6.2593 per dollar, down 0.02 percent . The currency lost 0.7 percent in April, and has depreciated 3.3 percent against the dollar so far this year. In 2013, the yuan strengthened 2.9 percent.
Dealers say the weakening yuan has led to the People’s Bank of China recycling some of the dollars it buys in the process into euros to rebalance its reserves.
“Every trader I know in London seems to be calling for a weaker euro. You can’t find anyone who wants it higher, yet it does not want to fall,” said a dealer with one London bank. (Additional reporting by Patrick Graham in London; Editing by James Dalgleish and Nick Zieminski)