NEW YORK: The dollar slipped against the euro ahead of the release of US Federal Reserve meeting minutes on Tuesday, though investors were reluctant to make big bets a day ahead of the European Central Bank meeting.
At least for the next few hours, the market focus in pre-Easter trade remains the Fed's meeting minutes from March which may provide clues on US policymakers' inclination to take further steps to ease policy, which would weigh on the dollar.
For now, the minutes are expected to suggest a standby approach, with the Fed likely to warn that premature tightening would be risky, while keeping an open-minded, but uncommitted view on further easing.
Fed officials on Monday signaled little appetite for further monetary steps to stimulate US growth in an economy that is gradually strengthening. However, Fed Chairman Ben Bernanke said last week that more stimulus would remain an option.
The ECB policy meeting is on Wednesday with analysts saying a hawkish message from the bank on the need to get back to concentrating on quelling inflation instead of helping Europe's economy and financial system out of crisis may give the euro a brief boost.
"We get a peek at the Fed minutes but (are) not expecting any surprises there," said John Doyle, currency strategist at Tempus Consulting in Washington. "After that we are holding for the Europeans."
The euro was last trading up 0.1 percent at $1.3337, with the session low at $1.3298 and the session peak at $1.3367.
Analysts said the gains in the shared currency came after investors failed to push the unit below $1.3300 and hold it there, forcing anyone betting against the euro to step back in to buy to prevent further losses.
ON HOLD
To be sure, many investors are still looking to sell the euro as concerns grew about a fragile outlook for the euro zone and high debt levels in Spain. Italian and Spanish debt yields rose on Tuesday amid concerns about the euro zone's ability to keep budget deficits under control.
Spain's public debt ratio is expected to hit 79.8 percent of gross domestic product in 2012, a document detailing the country's 2012 budget showed on Tuesday.
Since the euro's mid- to late-March rally from $1.3000 to just below $1.34 fizzled out, the currency has stayed in a relatively tight $1.3250-$1.3400 range. Many analysts expect it to move lower if it breaks below that area.
The euro was last little changed against the Swiss franc at 1.2031 francs, but still near a two-month low as traders pushed the shared currency closer to the 1.20 franc floor set by the Swiss National Bank last year.
YEN SWINGS
Against the yen, the dollar was last up 0.1 percent at 82.18 yen, recovering from a drop to a low at 81.54 yen, its weakest since March 9.
Analysts said the broader trend for the yen to weaken remains intact following the Bank of Japan's unexpected easing of monetary policy in February. Speculation that the Fed could tighten its own policy faster than previously expected - and raise the return for holding dollars - have also weighed on the Japanese currency.
"People have been buying into the idea that the yen could weaken and perhaps we have seen the strongest period for the yen," said Dag Muller, technical analyst at SEB in Stockholm. "But in the near term, the yen could succumb to more of a correction from short-term exaggerated levels."
The Australian dollar was down 0.4 percent at US$1.0366 , cutting earlier gains, after the Reserve Bank of Australia kept interest rates unchanged at 4.25 percent and suggested a bias toward easing.
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