The dollar remained stable after strengthening somewhat this morning, as a dearth of economic data today leaves investors looking to central bank meetings later this week. The dollar gained some ground, mainly against the euro and pound, after weakening significantly in past weeks as investors square off their positions ahead of the Federal Reserve's interest rate decision tomorrow. The dollar has recently been pressured by mixed US data, and analysts said today's strength is a matter of investors unwinding short dollar positions. The next key driver for the dollar will be the Fed, which is widely expected to keep rates unchanged, leaving markets to watch key words, phrases, and forecasts. "Although tomorrow's (Fed) statement is likely to acknowledge core inflation, measures have softened over the last six weeks, this 'dovish' evolution could well be mitigated by an acknowledgement that high energy prices again have the potential to sustain inflation pressures," said Steve Pearson at HBOS, who expects the 'inflation bias' to be maintained. Meanwhile, the euro was little affected by German industrial output data. Industrial production fell 0.1 pct in March from February, better than the 0.2 pct fall predicted by analysts. Manufacturing output rose 0.3 pct. Despite the fall in the headline rate, analysts said the outlook for the sector remains bright, while yesterday's factory orders surprised to the upside, suggesting second quarter output should remain firm. Elsewhere, the pound was on a back foot after a holiday yesterday, with little in the way of data once again putting the focus on the central bank's interest rate decision. The Bank of England is widely expected to raise rates by a quarter point on Thursday, with some market-watchers seeing a small chance of a larger move. A 50 point hike would come as a surprise and would see a significant rally for the pound.