"I think the market is searching for reasons to buy the dollar," said Hideaki Inoue, chief manager of the forex division at Mitsubishi Trust and Banking. "Any signs that the Fed would tighten policy at a faster pace will lead to dollar-buying."
The Fed statement is due after the meeting of the policy setting committee, the first of a series of closely watched events this week that includes US jobs data and a meeting of the Group of Seven (G7) economic powers.
The dollar was at around 103.65 yen, little changed from late US levels. The euro bought around $1.3080, up from $1.3046 but within the past week's range between 1.3035 and 1.3090.
It also firmed to 135.55 yen from 135.30.
Traders said the strength in the single currency was due to buying of European bonds by Japanese investors.
The Australian dollar stood at 77.45 US cents, versus 77.40. It dipped briefly to around 77.20 after the Reserve Bank of Australia left its cash rate unchanged at 5.25 percent.
Dealers said they expected cautious trading to continue for the rest of the week ahead of a slew of major events.
On Friday, the market will take a look at the US employment report for January and digest a speech on the US current account by Fed Chairman Alan Greenspan.
Economists surveyed by Reuters say the US economy likely created 190,000 new jobs in January, more than the 157,000 in the previous month.
The G7 meeting is slated for Friday and Saturday, with the market focusing on what the G7 nations will talk about with China.
Speculation that Beijing might announce a relaxing of the yuan peg to the dollar has kept traders on edge, causing volatile trading in the yen.