(Corrects to add "FOREX" to headline)

By Brigid Riley

TOKYO (Reuters) -The dollar dropped to a fresh four-month low on Thursday after the Federal Reserve's latest economic projections indicated the interest-rate hike cycle has ended and lower borrowing costs are coming in 2024.

The yen jumped in response, briefly breaking below 141 yen versus the greenback for the first time since late July.

Meanwhile, the Aussie and New Zealand dollar surged to new multi-month highs after Australian employment data blew past forecasts.

Fed Chair Jerome Powell said at Wednesday's Federal Open Market Committee (FOMC) meeting that the historic tightening of monetary policy is likely over, with a discussion of cuts in borrowing costs coming "into view." Policymakers were nearly unanimous in their projections that borrowing costs would fall in 2024.

"This is a huge development for markets as we head into the new year and provides much-needed clarity. And clarity in this instance meant risk-on," said Matt Simpson, senior market analyst at City Index.

The U.S. dollar index, which measures the greenback against a basket of currencies, slipped as far as 102.42, it's lowest since mid-August. It was last down 0.31% at 102.56.

The FOMC meeting will likely overshadow upcoming economic data before personal consumer expenditures data is published next week, leaving room for "further downside potential for the US dollar," Simpson said.

Markets are now pricing in around a 75% chance of a rate cut in March, according to CME FedWatch tool, compared with 54% a week earlier.

The yen continued to strengthen in the wake of the greenback's tumble, climbing to its highest since July 31 at 140.95 yen per dollar. It was last up around 1% at 141.46 yen.

The dovish FOMC meeting may have caught some traders who were bearish on yen and bullish on the dollar by surprise, prompting them to quickly unwind positions, said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

Japanese exporters who haven't yet increased hedge ratios are likely rushing to make adjustments as well, he added.

Expectations that the Bank of Japan (BOJ) could end negative interest rates at its monetary policy meeting on Dec. 18-19 have largely died down, but the BOJ could make tweaks to its statement, such as language that the bank will not hesitate to ease further if necessary, said Yamamoto.

That kind of change could "be regarded as one step toward normalisation...so that could be positive for the Japanese yen," he said.

Focus now shifts to a parade of central bank decisions, including the European Central Bank and the Bank of England (BoE), Norges Bank and Swiss National Bank.

The Norwegian central bank is considered to be the only bank that could potentially raise rates. There is also a risk the SNB could dial back its support for the Swiss franc in currency markets.

The euro rose 0.25% to $1.09015, while sterling was last trading at $1.2642, up 0.19% on the day.

The Australian dollar, meanwhile, hit over a four-month high at $0.6728 after domestic net employment jumped by 61,500 in November, compared to an increase of around 11,000 that markets had been forecasting.

The kiwi rose 1.04% versus the greenback to $0.6238, despite data showing the New Zealand economy unexpectedly contracted in the third quarter.

In cryptocurrencies, bitcoin rose 0.39% to $43,057.