Investors were also hesitant to tilt their positions before US jobs data and a meeting of Group of Seven rich nations later in the week.
"The dollar's weakness is marginal and people are not willing to take big positions given that we have so much news coming out towards the end of the week," said Niels Christensen, senior currency strategist at Societe Generale in Paris.
"The Fed's policy is well directed and it meets expectations so the statement will be crucial. They are likely to be pleased with the labour market and they could voice concern a bit about inflation, but it's hard to see how they can become more hawkish."The euro was up over a quarter percent from the US close at $1.3074 at 1240 GMT, after hitting 6-day highs of $1.3095 earlier.
It was at 135.21 against the yen after reaching its highest level in nearly three weeks earlier in the session at 135.80, a move partly bolstered by buying from Japanese investors in European bonds.
The dollar was at around 103.40 yen, slightly down from late US levels.
German unemployment rose in January to its highest recorded level since 1933 as government labour market reforms and seasonal effects added more than half a million people to the total.
The Fed statement is due after the meeting of the policy-setting Federal Open Market Committee, the first of a series of closely-watched events this week.
US President George W. Bush's State of the Union speech is due later, with traders watching closely for any specific steps to curb a large and growing budget deficit, although some analysts are sceptical.