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By Rae Wee
SINGAPORE, March 19 (Reuters) - The yen dwindled near the 150 per dollar level on Tuesday but held its ground ahead of a pivotal policy decision from the Bank of Japan (BOJ), while the U.S. dollar towered over its peers as bets for early rate cuts there were trimmed.
Rate decisions from the BOJ and the Reserve Bank of Australia (RBA) come under the spotlight in the Asia day, and currency moves were subdued early on Tuesday with traders hesitant to take on new positions ahead of the outcomes.
The yen was last little changed at 149.14 per dollar, while the Australian dollar fell 0.06% $0.6556.
The BOJ, in particular, takes centre stage, given swirling speculation that the dovish central bank could finally phase out years of uber-easy policy at the conclusion of its two-day policy meeting on Tuesday.
Against the euro, the yen steadied at 162.18, with the Japanese currency likewise little changed against the Aussie at 97.78.
The Nikkei newspaper reported on Monday the BOJ is set to decide on ending its negative interest rate policy and also call time on its yield curve control and purchase of risk assets at this month's meeting.
"If they do hike... I think we have to wait at least several more months for the subsequent hike into positive territory," said Gareth Berry, FX and rates strategist at Macquarie.
"It's not going to be back-to-back March and April hikes. There will be grounds for pause... they're not in a rush."
Japanese policymakers have been quick to caution that accommodative monetary conditions will likely remain even after the BOJ ends its negative interest rate policy, tempering any market expectations for a hawkish shift in the central bank's policy stance.
That would likely keep the yen under pressure in the near term as well, given still-stark interest rate differentials between Japan and the United States, and as bets the Federal Reserve is likely to keep rates higher for longer ramp up.
"Anytime the Fed and the BOJ are moving policy settings at about the same time, it's always the Fed that rules and dominates the price action, even in dollar/yen. So BOJ's decisions generally are, as far as the yen is concerned, a matter of secondary importance," said Berry.
RATES OUTLOOK
Down Under, expectations are for the RBA to keep rates on hold later on Tuesday, with major local banks in Australia forecasting no change in rates until at least end-August.
"Holding policy rates steady and policy guidance broadly unchanged seems like a reasonably straightforward decision in the presence of high uncertainty," said Carl Ang, fixed income research analyst at MFS Investment Management.