The dollar slipped slightly against a range of currencies on Tuesday including the yen, which strengthened following the Bank of Japan's (BOJ) rate decision. Broader risk sentiment remained fragile with the Israel-Iran conflict entering its fifth day.

As widely expected, the central bank maintained short-term interest rates at 0.5% by a unanimous vote at the two-day policy meeting that ended on Tuesday.

The Japanese central bank’s decision to slow the pace at which it cuts its monthly bond purchases came as its policy committee concluded a two-day meeting on Tuesday with a unanimous vote to hold short-term interest rates at 0.5 per cent.

The Bank of Japan kept interest rates unchanged Tuesday and said it would taper its purchase of government bonds at a slower pace amid concerns about the effect of trade uncertainty on the world's number four economy.

The Bank of Japan kept interest rates steady on Tuesday and decided to decelerate the pace of its balance sheet drawdown next year, signalling its preference to move cautiously in removing remnants of its massive,

The Bank of Japan’s decision to hold interest rates and slow its withdrawal from the bond market was widely expected and should help reassure investors, though there will still be plenty of interest in Governor Kazuo Ueda’s press conference,

The central bank target of around 0.5 percent for short-term rates will remain in place. It made the announcement after its two-day policy meeting ended on Tuesday. The BOJ decision comes amid uncertainty about the economic effects in Japan of US President Donald Trump's tariff measures.

The Bank of Japan will forego another interest rate hike this year due to uncertainty over U.S. tariff policy, according to a slight majority of economists in a Reuters poll who expect the next 25-basis-point increase in early 2026.