• USD/JPY extends its directionless price move as traders opt to wait for the crucial BoJ decision.
• Economic risks due to the Iran war undermine the JPY, though intervention fears help limit losses.
• Mixed signals over US-Iran peace talks keep the USD bulls on the defensive and cap spot prices.

The USD/JPY pair is seen consolidating in a narrow band around mid-159.00s during the Asian session on Tuesday as traders opt to wait for the crucial Bank of Japan (BoJ) before placing fresh directional bets.

The Japanese central bank is widely expected to keep the policy rate steady at 0.75% amid economic concerns stemming from the US-Iran war. Meanwhile, the market focus will be on the BoJ's quarterly outlook report and the post-meeting press conference, which will be scrutinized for cues about the future policy outlook. This, in turn, will play a key role in influencing the Japanese Yen (JPY) and providing some meaningful impetus to the USD/JPY pair.

Heading into the key central bank event risks, investors remain worried that Japan's economy will come under substantial strains amid the risk to energy supplies due to continued disruptions to shipping through the Strait of Hormuz. In fact, traffic through the strategic waterway remains blocked due to Iran's restrictions on movements and the US naval blockade of Iranian ports. This continues to undermine the JPY and supports the USD/JPY pair.

However, speculations that Japanese authorities will step in to stem further weakness in the domestic currency hold back the JPY bears from placing aggressive bets. The US Dollar (USD), on the other hand, remains depressed amid mixed signals over US-Iran peace talks and ahead of the crucial two-day FOMC policy meeting, starting later today. This further contributes to keeping a lid on the USD/JPY pair and leading to subdued, range-bound price action.

Meanwhile, Iran reportedly gave the ‌US a new proposal on reopening the Strait of Hormuz and ending the war, with nuclear negotiations postponed for a ‌later stage. However, the Wall Street Journal reported that US President Donald Trump was skeptical about Iran not dealing in good faith or being open to meeting his key demand of ending nuclear enrichment. This, in turn, should help limit the downside for the Greenback and the USD/JPY pair.