The euro edged lower on profit-taking after hitting three-month highs against the dollar on Friday, with trade quiet amid a dearth of economic data today and focus centred on the upcoming US Federal Reserve interest rate decision on Wednesday. The dollar fell sharply last week as the market brushed off stronger-than-expected US inflation and industrial production data and worries over the US housing market slowdown and the recent turbulence on financial markets continue to dominate sentiment. This morning, the euro has reversed some of those gains, although it remains above the 1.33 usd level as interest rate differentials are expected to continue to support the currency. The euro "has come under some corrective downside pressure (against the dollar) this morning following the sharp move higher on Friday", currency analysts at BNP Paribas said. "US data on Friday was mixed, but investors see euro rate expectations rising and yield differentials declining providing euro/dollar with support," they said. Focus this week will centre on the interest rate decision in the US on Wednesday. US rate-setters are fully expected to leave interest rates unchanged, with attention focused on the accompanying statement for any hints that they may be considering a move away from their current tightening bias. The yen came under pressure, however, gaining very limited support from China's decision to raise interest rates by 27 basis points as the market focused on this week's interest rate decision in Japan. The Bank of Japan's policy board began its two-day meeting today. It is set to leave interest rates unchanged and is not expected to raise borrowing costs again until much later in the year. Elsewhere, the pound firmed against the dollar and the euro on a busy week for UK data.