Dollar firms vs euro ahead of central bank meetings

The dollar firmed slightly against the euro on Monday in a cautious market ahead of central bank meetings this week on both sides of the Atlantic.

The euro bought $1.3264 around 2100 GMT, down from $1.3278 at the same time Friday.

But the dollar weakened against the Japanese currency, fetching 97.89 yen compared with 98.20 yen Friday.

The yen also gained ground against the euro, which bought 129.85 yen, down from 130.48 yen.

The dollar was showing some renewed vigor after a sharp fall against the euro Friday.

Markets were focused on the opening Tuesday of a two-day US Federal Reserve meeting, to be followed by Thursday meetings of the European Central Bank and the Bank of England.

None of the banks is expected to change ultra-low interest rates that are supporting economies struggling to grow.

The Fed's Federal Open Market Committee was virtually certain to leave policy direction in place. But the post-meeting FOMC statement will be scrutinized for signs of when, and how, the US central bank intends to wind down its massive stimulus program.

"A fuzzy outlook for Fed taper plans has caused investors to pare back on bullish bets on the greenback," said Joe Manimbo at Western Union Business Solutions.

"But so long as investors see a reasonable case for a September Fed taper and this week's US data are generally consistent with an improving economy, the greenback's downside may prove relatively modest."

Also on tap this week in the world's biggest economy is the first estimate of second-quarter gross domestic product growth, on Wednesday, and Friday's jobs report for July.

"The influential nature of this week's events has the potential to shape currency market sentiment for weeks to come," Manimbo said.

Boris Schlossberg of BK Asset Management said that mild risk aversion and failed technical breakouts helped the dollar to find support in afternoon trade.

The dollar firmed against the Swiss currency, buying 0.9306 franc, up from 0.9284 franc Friday.

The pound, however, edged higher to $1.5344, compared with $1.5377.