The dollar index, which tracks the greenback against a basket of six major rivals, edged down 0.1 per cent to 91.739, though it remained well above its more than 2-1/2 year low of 91.011 plumbed on September 8.
In China, equities were boosted by stronger domestic data that added to views that economic growth is holding up and by the loosening of margin requirements on stock index futures trading. Financials were also pressured, with the sub-index edging down 0.57 percent.
The US dollar bought 111.46 Japanese yen, lower than 111.48 yen of the previous session. Toshiba stock was up 0.32 percent in early trade.
ENERGY: Benchmark U.S. crude rose 36 cents to $50.27 a barrel while Brent crude, used to price global oils, advanced 17 cents to $55.67.
A higher target rate, meanwhile, would push the Fed further from the zero percent lower bound it has been trying to escape after a decade nurturing the US economy into a post-crisis recovery.
The U.S. central bank's description of inflation in its policy statement as well as fresh economic forecasts from individual policymakers will be the main focus for financial markets amid a recent spate of lukewarm domestic data.
Asian stock markets were little changed on Wednesday as investors took to the sidelines ahead of the Federal Reserve's announcement of the result of its meeting.More news: USA troops deployed to Israel get a new barracks
Meanwhile, slumped 0.37% to 1.2247.
The dollar traded narrowly around ¥111.50 in early trading, as a wait-and-see mood grew ahead of the Fed's decision at its two-day Federal Open Market Committee policy meeting through Wednesday. Low inflation and impressive growth/low unemployment have posed a perplexing conundrum for monetary policymakers who have chose to trust in the data and start tightening despite the fact that inflation remains well below target. Investors see a 56% chance the Fed will raise rates in December, according to CME Group.
The greenback recorded its best week against the Japanese currency since November last week, gaining 2.8 percent, as a rise in US yields bolstered its appeal and as data showing a pick up in USA consumer prices helped rekindle expectations that the Fed could hike rates again in December.
On Wall Street on Monday, the Dow Jones Industrial Average closed at a record high for the fifth straight session, and the S&P 500 marked its second straight closing record high, as higher U.S. Treasury yields helped lift financial shares.
There was virtual unanimity that the Fed would not increase rates today but rather only announce the starting date for the gradual reduction of its huge 4.47 trillion dollar balance sheet.
"If we move closer to a U.S. rate hike, that should come along with a bit more dollar strength and euro weakness which would harden the ECB's exit case and be a headwind for government bonds", said Commerzbank strategist Rainer Guntermann.
With rates expected to remain on hold should not mean much for the dollar unless there is a "hawkish" signal from this week's Fed meet.