(Reuters) -- Asian shares edged higher Wednesday as investors remained cautiously optimistic that a German court would approve the legality of the euro zone's bailout fund later in the day and the U.S. Federal Reserve may deliver further stimulus measures this week.

Germany's Constitutional Court said Tuesday that it will go ahead with a ruling on Wednesday on the European Stability Mechanism and budget rules.

Markets are anticipating an approval which would help facilitate the European Central Bank's bond-buying program aimed at capping soaring borrowing costs in struggling euro zone members.

MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was up 0.2 percent after U.S. and European stocks rose overnight, while Japan's Nikkei average <.N225> opened up 0.2 percent. .T

"Regarding the two major events this week, we believe that the ESM and the Fiscal Pact should pass the German constitutional test, but the court may require clarification on technical modalities for its operation," Barclays Capital analysts said in a research note.

"We also look for the Fed to extend its policy rate guidance into 2015 and initiate an open-ended asset purchase program."

The Fed begins its two-day policy meeting on Wednesday.

Markets widely expect some type of monetary stimulus to underpin the fragile U.S. economy ranging from a powerful bond buying known as quantitative easing to further strengthening the Fed's commitment to keeping interest rates near zero.

"Where is the QE pain trade? We find that gold and USD/JPY are the most QE sensitive, followed by AUD, NZD and to a lesser extend EUR," Sebastian Galy, strategist at Societe Generale, said in a note.

The Australian dollar, a typical gauge of risk appetite, steadied around $1.0430 on Wednesday after soaring to a near three-week high of $1.0449.

The dollar index .DXY measured against a basket of key currencies fell to a four-month low on Tuesday, weighed by expectations for more Fed easing and a warning of a credit rating cut from Moody's Investors Service.

Moody's said the United States, the world's biggest economy, may lose its top AAA rating if next year's budget talks do not produce policies that reduce the country's debt. Standard & Poor's cut the top-notch rating in August 2011.

The dollar traded at 77.75 yen on Wednesday, barely above a 3-1/2 month low of 77.70 touched on Tuesday, while the euro was at $1.2850, off a four-month high of $1.2872 hit on Tuesday.

A weaker dollar buoyed dollar-based commodities on Tuesday.

U.S. crude traded down 0.3 percent at $96.89 a barrel on Wednesday while Brent fell 0.4 percent to $115.

Spot gold inched up 0.1 percent to $1,733 an ounce, not far from Friday's peak of $1,741.30, its highest since February 29.

Also supporting sentiment, Premier Wen Jiabao said on Tuesday that China is on track to meet this year's target for economic growth and if needed the government could utilize a 100 billion yuan fiscal stability fund to boost growth, keeping investor hopes for more stimulus policies.

Wen's comments followed weekend remarks from President Hu Jintao that China would do all it could to help a global recovery by rebalancing its economy, Asia's biggest and the world's second-largest.