Linked to the latter in particular, according to the CME's Fed Watch tool as of 2107 BST Fed funds futures were pointing to 71.9% odds of a 25 basis point rate hike in the central bank's main policy rate on 13 December.
"Fed will likely be a non-event, but if they are slightly more dovish in their language, I think you could see a reversal in the banks, but I don't see a lot of activity", said Aaron Clark, portfolio manager at GW&K Investment Management. Any new recession or economic shock would interrupt the normalization plans on top of gradual rate hikes.
"The biggest risk for the dollar is... if they cast doubt on a December rate hike", Manimbo said.
The Federal Reserve said Wednesday that the USA economy is strong enough for the central bank to begin reducing its $4.5 trillion balance sheet in October, gradually unwinding a massive stimulus program started after the economy entered a severe recession almost a decade ago. At this rate it will take years before a major dent is made in the balance sheet.
The Fed has given clear signals it will start to wind down its $4.5 trillion balance sheet, in what would be a symbolic moment for the central bank after nearly a decade of unconventional monetary policy.
From next month, it will reinvest $10 billion each month less into bonds, increasing the "run-off" amount by $10 billion each three months until it reaches $50 billion. For years, officials have indicated the rate would eventually get to 3 percent.
As gasoline prices increased following the hurricanes, inflation could rise, but only temporarily, the Fed noted.
Investors are eagerly expecting the Federal Reserve to announce the first steps toward unwinding its $4.5 trillion balance sheet.
That kept interest rates artificially low for the past nine years.
On Wednesday, the central bank reduced its long-run target for the fed funds rate.
-The S&P 500 index rose 0.1 percent to 2,508.19 as of 4 p.m.in NY.
S&P 500 e-minis were up 0.5 points, or 0.02 percent, with 46 contracts changing hands.
USA government bond prices fell Wednesday after the Federal Reserve kept a December interest rate increase on the table and said it would start shrinking its asset holdings in October. But it forecasts only two rate increases in 2019 and one in 2020.
While the decision to shrink the Fed's balance sheet is much expected, when and how the Fed will manipulate its target for short-term interest rates is less clear.