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The U.S. dollar started Tuesday on the back foot as investors took stock of developments in the Middle East and braced for a slew of speeches by central bank officials this week headlined by Fed Chair Powell to gauge the monetary policy outlook.

The yen was pinned close to the key 150 per dollar level, keeping traders on edge for any signs of intervention by the Japanese authorities.

The yen last fetched 149.62 per dollar, having slipped to 150.17 on Oct. 3, the weakest in a year, before getting some relief in a brief rally.

Japan's top financial diplomat Masato Kanda said the yen was still perceived as a safe haven asset like the dollar and the Swiss franc despite its recent weakness, and was benefiting from demand due to the conflict in the Middle East.

Israel's shekel on Monday breached the key level of four per U.S. dollar for the first time since 2015 on jitters over Israel's war with the Palestinian militant group Hamas. It was last down 1% at 4.0199 per dollar in early Asian hours.

"Geopolitics will continue to be a key driver for markets in the week ahead as investors continue to weigh the risks of an escalation with the approach of the U.S. authorities to prevent the conflict spreading to rest of the Middle East region," said Charu Chanana, market strategist at Saxo in Singapore.

The dollar index, which measures the U.S. currency against six rivals, eased 0.038% to 106.20, after dropping 0.36% on Monday.

Investor attention will firmly be on Fed Chairman Jerome Powell, who is due to speak on Thursday, during a busy week of speeches by regional bank heads. Fed officials will enter into a blackout period on Oct. 21 before the Fed's Oct. 31–Nov. 1 meeting.

Federal Reserve Bank of Philadelphia President Patrick Harker said on Monday the central bank should not create new pressures in the economy by increasing the cost of borrowing.

"We should not at this point be thinking about any increases" in the Fed's rate target, Harker said.

Christopher Wong, currency strategist at OCBC, said the dollar is likely caught in a range for now.

"Higher for longer (rates), relative U.S. growth resilience and fears of broadening conflict are some of the factors that may underpin support for the dollar," Wong said.

"But less-hawkish Fed speaks suggests the Fed maybe setting the stage for an extended pause. This may mitigate dollar upside."

In other currencies, the euro was down 0.01% at $1.0557, while sterling was last at $1.2214, down 0.02% on the day.

The Australian dollar rose 0.27% to $0.636. Australia's central bank considered raising rates at its recent policy meeting but judged there was not enough new information to warrant a move, minutes of the Reserve Bank of Australia's Oct. 3 policy meeting showed.

The News Zealand dollar eased 0.30% to $0.591 after data on Tuesday showed the nation's consumer inflation hit a two-year low in the second quarter, reducing expectations the central bank will hike the cash rate further in November.