After the Fed hiked rates in December, markets and analysts widely expected no further action at the January FOMC meeting. However, with sharp risk-off moves in global markets since the start of the year, sentiment has turned to looking for a more dovish Fed. Specifically, some market participants anticipate the Fed will signal far fewer rate hikes this year than the four implied by the December dot plot.

"We think the Fed can afford to remain patient this week and watch to see how the macroeconomic data and markets evolve heading into the March meeting. The Fed may sound somewhat more cautious in the January statement, but will not give updated guidance on the pace of hikes", says BofA Merrill Lynch.

After a number of central banks gave dovish messages in recent weeks, including Draghi suggesting additional ECB easing could come in March and Kuroda stating the BoJ will do whatever it takes to get inflation back to target, attention has shifted to the Fed.

EM investors have also grown anxious about the pace of Fed tightening. A Fed that is seen as insufficiently dovish could disappoint risk markets and spill over into fixed income assets through sentiment and safe haven flows.

With no press conference or updated forecasts (no new dots) in January, markets may need to wait for subsequent speeches, particularly Chair Yellen's Semi-annual Monetary Policy (Humphrey-Hawkins) testimony on 10-11 February, to get a better sense the Fed's current views on the likely pace of hiking and risks.