* C$ at C$1.0254 vs US$, or 97.52 U.S. cents * C$ firms vs yen, NZD, AUD; weaker vs euro * Federal Reserve maintains bond-buying policy * Bond prices fall across curve By Solarina Ho TORONTO, March 20 (Reuters) - The Canadian dollar held onto session gains against its U.S. counterpart on Wednesday after the Federal Reserve said it would continue its aggressive monetary easing policy. The Fed said it will continue to buy $85 billion in mortgage and Treasury bonds per month and acknowledged signs the country's economy was improving. The decision came despite growing concerns from some officials about the risks the purchases could pose. The Canadian dollar's "stronger, having strengthened from noon onwards, but not materially so - still within the range for the day," said Camilla Sutton, chief currency strategist at Scotiabank, adding the Canadian dollar was not particularly active, with much of the focus remaining on Cyprus. The U.S. central bank was a touch more dovish in a nod to the uncertainty in Europe. It removed a reference from its last policy statement that said global financial strains were easing. The Canadian dollar strengthened earlier in the session on hopes a Cyprus deal could be reached to rescue the indebted euro zone country. The Cypriot parliament rejected on Tuesday a proposed levy on bank deposits, which was a condition for the bailout. The general assumption in markets is that policymakers will cobble together a deal to keep Cyprus in the currency bloc. "I think the market's taking a wait and see. ... The hopes are that they come to some solution that won't be quite as radical," said Don Mikolich, executive director, foreign exchange sales at CIBC World Markets. The Canadian dollar, which traded within a narrow 37-point range on Wednesday, finished the North American session at C$1.0254 versus the U.S. dollar, or 97.52 U.S. cents, stronger than Tuesday's close at C$1.0270, or 97.37 U.S. cents. It was stronger against most other major foreign currencies, including the Japanese yen and its commodities-linked cousins, the New Zealand and Australian dollars . It was weaker against the euro. The loonie, as the currency is colloquially known, remains under pressure as domestic data remains mixed and more evidence is needed to support last month's robust employment figures. Looking ahead, Cyprus will remain the center of attention, along with overnight PMI data from overseas. On the Canadian data front, retail sales and the federal budget are both expected Thursday. Canadian government bonds eased across the curve, with the two-year bond down 4 Canadian cents to yield 0.990 percent, while the benchmark 10-year bond fell 33 Canadian cents to yield 1.858 percent.