The Fed is expected to cut the target range for the Fed funds rate by 25 basis points at this week’s meeting.
Stronger-than-expected retail sales and consumer sentiment data, coupled with hopes of a breakthrough in the trade dispute with China, appeared to weaken the argument for easing in recent days.
The U.S. dollar index that tracks the greenback against a basket of other currencies was little changed at 97.863.
"Speculators are already inordinately short in the dollar," said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities in Tokyo, in a Reuters report.
"If there are no surprises from the Fed, the speculators will have to give up their dollar shorts. The biggest reaction would be in dollar/yen, because you can't really buy the pound or the euro at the moment."
Traders are also keeping an eye out on the Sino-U.S. trade development. U.S. President Donald Trump told reporters on Tuesday that Washington could reach a trade deal with China before the U.S. presidential election.
The president said that China would prefer to deal with someone else, but warned that terms of the deal will be “far worse” if it came after the 2020 election.
"I think there’ll be a deal maybe soon, maybe before the election, or one day after the election. And if it’s after the election, it’ll be a deal like you’ve never seen, it’ll be the greatest deal ever and China knows that," Trump said.
The USD/CNY pair traded 0.1% lower at 7.0866.
The USD/JPY pair inched up 0.1% to 108.19. The yen was little moved by White House adviser Larry Kudlow’s comments that Trump and his administration may formally announce a trade deal with Japan next week.
The GBP/USD pair slipped 0.1% to 1.2486 as sentiment remained weak amid uncertainty over Brexit.