The outcome of Wednesday's Federal Reserve meeting is expected to set the tone for trade in the U.S. dollar heading into 2014, whatever decision is reached on the highly-anticipated tapering of monetary stimulus.
Contrary to expectations, the dollar has not seen a broad-based surge even as market expectations for when Fed tapering will begin have been bought forward in the face of upbeat economic data.
While the dollar hit a five-year high against the yen last week, it has weakened almost 8 percent against the euro in the past three months. The dollar index, which measures the greenback's value against a basket of other major currencies, is hovering around 80.04 – not far from where it ended last year.
"All the pundits have said we're going to have tapering, the dollar is going to go through the roof and so forth," said Axel Merk, president and CIO at Merk Investments. "Guess what, the dollar has weakened against the euro for example and the reason is that the dollar is not benefiting from this [tapering expectations] and won't benefit next year because the Fed is behind the curve."
(Read more: Fed taper expected sooner: CNBC Survey)
The Fed took markets by surprise in September by not starting a widely-expected scaling back of its $85 billion-a-month asset purchase program.