On Tuesday, a better-than-expected report on U.S. house builder confidence and inflation data suggesting low but stable price growth supported the view that economic conditions are adequate for the U.S. central bank to start scaling back its $85 billion-monthly bond-purchases.
A majority of economists polled by Reuters expect the taper to happen in March, but a recent run of upbeat economic data has steadily shortened the odds on an announcement at the end of a two-day meeting later in the day -- or in January.
"The market neutral decision is a January taper," Citigroup said in a note. "A nominal taper (on Wednesday) would catch 60 percent of the market by surprise - and FX positioning remains overweight emerging market FX."
"For traders, this is still USD positive, but the sustainability of USD strength depends on any language changes we expect to accompany it."
The Federal Open Market Committee will release a policy statement at 1900 GMT, followed by Fed Chairman Ben Bernanke hosting a keenly-awaited news conference a half hour later.
MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.1 percent. On Tuesday, it trimmed early gains to end flat.
Japan's Nikkei futures dipped 0.2 percent, signalling a modest drop after rebounding on Tuesday from a sharp loss on the first day of the week.
Still, the benchmark has risen 47 percent this year, on track to its best yearly rise since 1972, powered by Tokyo's aggressive fiscal and monetary stimulus to revive the world's third-largest economy.
Overnight, U.S. stocks closed slightly lower, with the Standard & Poor's 500 down 0.3 percent, as investors were reluctant to make big bets before the Fed decision.
Investors also cut back some of their long dollar positions against the euro and the yen. The greenback was down 0.1 percent at 102.58 yen, adding to a 0.3 percent decline overnight and pulling further away from a five-year high of 103.925 yen set on Friday.
"We may see nothing at all from the Fed, although they would give a strong indication a taper is on the cards. This is a strong possibility as well, which could be USD negative," Chris Weston at financial spreadbetter IG wrote in a note.
"I would use this as a buying opportunity though, especially against the JPY, given the market will start to expect this action in January."
The euro was steady at $1.37705, having risen 0.2 percent in the previous two sessions. The common currency touched a six-week high of $1.3811 on December 11.
Among commodities, U.S. crude prices added 0.1 percent to about $97.3 a barrel, recovering some of the previous session's 0.3 percent decline.
Gold stabilised at around $1,229.6 an ounce, having fallen 0.8 percent overnight. The precious metal has fallen more than 26 percent this year, heading for its worst year performance since 1981.