• USD/JPY attracts fresh buyers during the Asian session, though the upside potential seems limited.
• Economic concerns stemming from Hormuz risks undermine the JPY and offer support to the pair.
• The divergent BoJ-Fed policy expectations might cap gains for spot prices amid intervention fears.

The USD/JPY pair regains some positive traction following the previous day's two-way directionless price moves and climbs to the 159.00 mark during the Asian session on Tuesday. Spot prices, however, remain confined in a familiar range held over the past month or so, warranting some caution before placing aggressive directional bets amid mixed fundamental cues.

The Japanese Yen's (JPY) relative underperformance comes amid worries that Japan's economy will come under strain as the risk to energy supplies remains due to continued disruptions to shipping through the Strait of Hormuz. This, in turn, is seen as a key factor acting as a tailwind for the USD/JPY pair. However, hawkish Bank of Japan (BoJ) expectations could help limit deeper JPY losses amid intervention fears.

Reuters, citing sources, reported that the BoJ is likely to hold rates in April amid Middle East uncertainty, but signal readiness to hike as soon as June as imported energy costs cloud the inflation picture. Furthermore, Japanese authorities have warned they will not tolerate excessive volatility and are prepared for "bold" action. This keeps intervention risks in play, which could support the JPY and cap the USD/JPY pair.

Meanwhile, the US Dollar (USD) remains well within striking distance of a nearly two-month low, touched last Friday, amid diminishing odds for a rate hike by the US Federal Reserve (Fed). The divergent BoJ-Fed policy expectations might further keep a lid on the USD/JPY pair. Hence, strong follow-through buying is needed to back the case for an extension of the pair's recovery from a one-month low set last week.