Dollar steadies ahead of Fed rate-setting meeting

The euro was trading at $1.4572 around 2100 GMT, compared with $1.4579 Friday at 0600 GMT.

Against the Japanese currency, the US unit fetched 81.82 yen, a tick lower than 81.87 yen Friday.

"The dollar was choppy today as US markets reopened and traders returned from the holiday weekend," Forex.com analysts said in a research note.

US financial markets were closed in observance of Good Friday.

Forex traders appeared to hedge their bets ahead of the two-day Federal Open Market Committee (FOMC) meeting that opens Tuesday.

Central bankers are widely expected to maintain interest rates at between zero and 0.25 percent, where they have stood since December 2008 in a bid to boost recovery from recession.

The FOMC panel also was expected to discuss whether the US economic recovery is strong enough to allow the Fed to wind down massive support. A $600 billion bond purchase program is due to end in June.

"This week, all eyes are now on the Federal Open Market Committee meeting which concludes on Wednesday as global portfolio managers watch for clues about US monetary policy direction and the implications for asset markets and currencies," said Samarjit Shankar at Bank of New York Mellon.

Markets keenly awaited Fed chairman Ben Bernanke's first post-FOMC news conference Wednesday. It will be the first by any Fed chief, in contrast with regular news conferences held by European Central Bank president Jean-Claude Trichet.

"Bernanke is not as savvy as Trichet when it comes to dealing with the press and any indecisiveness by the Fed chairman could add pressure on the dollar," said Kathy Lien at GFT.

In late New York trade, the dollar slipped against the British currency to 1.6493 pounds, from 1.6514 Friday.

The dollar ticked lower to 0.8808 Swiss francs from 0.8862 francs Friday.