Dollar bulls are betting the Federal Reserve will start cutting stimulus measures as early as this week, CNBC's latest poll of currency traders, analysts and strategists showed.
The Fed may reduce the monthly pace of bond purchases by between $5 billion and $10 billion at its policy-setting this week - Chairman Ben Bernanke's last before his term expires at the end of January 2014 - as recent data suggests that the economy is gaining momentum.
"Mr. Bernanke is desperate to begin taper on his watch," said Scott Nations, President and Chief Investment Officer at NationsShares. Nations expects a "mini" taper at this week's meeting with the Fed announcing a cut in bond purchases by $5 billion a month.
(Read more: Westpac's contrarian view calls no taper in 2014)
Exactly half the respondents (13 out of 26) believe the U.S. dollar will extend gains this week - primarily against the Japanese yen - reflecting expectations that the Fed will signal -or even implement - the scaling-back of $85 billion a month bond purchase program as the economy improves.
Meanwhile, a Nomura client survey published last week showed a 37 percent possibility of tapering at this week's meeting of the Federal Open Market Committee (FOMC), which was "higher than we were expecting."
Ray Attrill, global co-head of foreign-exchange strategy at National Australia Bank in Sydney puts the odds on a December taper at 65 percent and expects the Fed to cut bond purchases by $10 billion if it does act – a scenario that he believes is well-priced into the U.S. dollar. "I don't think the dollar will get much of a lift beyond knee-jerk gains on the day and that we could be lower on the week."
Policymakers may sweeten any reduction in asset purchases with improved 'forward guidance' to reinforce interest rates will remain close to zero for longer, possibly revising self-imposed thresholds on unemployment and inflation.
(Read more: Blink and you'll miss it! The mini-taper)
"Our position remains 'no taper'," said Robert Rennie, Westpac's global head of FX strategy in Sydney. "However, we can see a 'technical' taper i.e. which would be small and come with an offsetting 'expansionary' adjustment to forward guidance."
Such a move may be accompanied by a cut in the interest rate paid on excess reserves (IOER), aimed at encouraging banks to park fewer funds at the Fed and instead lend more into the real economy. In combination, those policy outcomes would constitute "in net terms, a broadly neutral policy shift," Rennie said.
The Fed's monetary policy setting body will meet on December 17-18 and is scheduled to release its summary of economic projections. Fed Chairman Ben Bernanke will hold a press conference after the FOMC's statement release.
Despite what some say is the non-negligible risk of Fed action this week, more than a third of those polled think the dollar bulls face a let-down. Fed policymakers will likely delay stimulus cuts until the first quarter of next year to give the economy time to generate a more self-sustaining recovery, they say.
(Read more: Get ready, here it comes: A December taper)
"I'd put the odds of a December taper at zero," said Tom Weber, senior commodity advisor at Portfolio Managers Inc. "The Fed will want to see sustained economic improvement, not just a single upbeat data point. Additionally, as this meeting is the Bernanke's 'twilight cruise', I don't see much of a desire to taint his legacy."
A decision by the Fed not to move this week may sow some dissension within the ranks of FOMC policymakers, Weber said.
"I expect the more hawkish Fed board members to really lay some ground work to do battle against a much more dovish Yellen into the New Year," he said. "I don't believe Yellen will be as amenable to tapering as the Bernanke would be."
— By CNBC's Sri Jegarajah. Follow him on Twitter: @cnbcSri