Dollar eases as markets await Fed decision

While the U.S. central bank is widely expected to keep rates unchanged, limited guidance from Chair Kevin Warsh coupled with higher oil prices have prompted a growing number of brokerages to pencil in the risk of a surprise rate hike.

"We're going into this meeting with a round of one-in-three chance for a rate hike priced in. First time we've seen pricing like that for a while," Nick Rees, head of macro research at Monex Europe, said.

"There is genuine uncertainty around this meeting, and I would expect that to lead to some volatility on the outcome, whichever way it breaks."

Against the yen, the dollar slipped 0.05% to 163.78 yen, but remained not far from a 40-year high and kept traders on alert for potential intervention from Japanese authorities to support it.

"There is a possibility that the FOMC's policy decision and the Chair's press conference could trigger a further strengthening of the dollar, pushing USD/JPY to 164," said Hirofumi Suzuki, chief FX strategist at SMBC.