The dollar remained steady above one-year euro lows ahead of tomorrow's keenly awaited interest rate decision from the US Federal Reserve and the latest US Treasury report on currencies. Analysts said technical factors, such as scaling back record long euro positions, are dominating the market ahead of tomorrow, which they added will have a major bearing on the dollar's near-term outlook. This technical recovery has pushed the euro down from yesterday's one-year high of 1.2788 usd and helped the dollar recover from 110.99 yen, its lowest level since Sept 23, 2005. Meanwhile, the pound has pushed back from its one-year high of 1.8691 usd. Despite the recovery, currency watchers cautioned that the dollar has a big day to negotiate tomorrow. "The (rate-setting) FOMC statement and the Treasury FX report will make for a very important Wednesday afternoon for FX markets," said Divyang Shah, global strategist at IDEAglobal.com. The expected quarter-point rate hike from the FOMC is discounted in the market. More important will be the accompanying statement and whether it paves the way to a pause in the Fed's tightening policy. The Fed has raised interest rates at 14 consecutive meetings since June 2004, taking its Fed funds rate up to 4.75 pct. Expectations of an imminent Fed pause, contrasting predictions of tighter monetary policy from the European Central Bank and the Bank of Japan, has been the main reason behind the dollar's slump on the foreign exchange markets in recent weeks, though other factors, such as the US current account deficit and worries over Iran's nuclear stance, have negatively impacted too. While the Fed is now expected to hike once more in May, taking its key repo rate to 5.0 pct, the ECB is expected to continue lifting its key refi rate over the coming year from the current 2.50 pct, while the BoJ is poised to lift borrowing costs for the first time in years. An hour and 45 minutes after the FOMC statement, the US Treasury will publish its foreign exchange report and the consensus is that China will not be cited as currency manipulators. China has faced fierce pressure to free up its foreign exchange system, particularly from the US, which contends that the yuan is made artificially weak and gives the Asian giant an unfair advantage in global trade. Even if the FOMC does send a signal that it intends to pause and the Treasury declines to label China a currency manipulator, most analysts expect the subsequent relief rally to be relatively short-lived.