Does the Fed have open-ended power to inject unlimited monetary liquidity, debasing dollars further?
''The market has now largely discounted that the U.S. Federal Reserve will introduce a more limited amount of quantitative easing next Wednesday. But there is still a question over whether the central bank will announce a finite amount of easing or whether it will be left open-ended, with liquidity being provided as needed in the months to come.
The dollar is also being undermined by uncertainty over how investors will react to the news. While some analysts believe the Fed's move has been largely priced in, others remain adamant that the U.S. currency will suffer as long as policy is eased further.
Before the Fed decision, the market will focus on Friday's third-quarter gross domestic product data for any indication that the U.S. economy is slowing more than anticipated. GDP growth is forecast to come in at 2.1%, up from 1.7% in the second quarter.
Meanwhile, the euro fell back from an earlier high of $1.3853 as investors started to focus on the two-day EU heads-of-state meeting in Brussels. German Chancellor Angela Merkel will present her plans for a crisis-resolution mechanism to prevent another debt meltdown in the euro zone.
However, this move is widely expected to create a split among the leaders that could undermine sentiment towards the singe currency, as it would highlight the growing division between the larger economies that are recovering and the smaller EU countries that are still struggling to overcome their debt burdens.''