The dollar held firm against the yen overnight, trading flat at Y159.29 after Bank of Japan Governor Kazuo Ueda offered no signals on when the central bank might adjust policy. Speaking at an international conference, Ueda highlighted how surging oil prices could impact inflation differently across varying economic conditions, leaving markets guessing on future monetary moves.

Investors are keeping close tabs on Middle East developments amid concerns that escalating conflict could send energy prices higher. Any supply disruptions would directly influence inflation dynamics that the BOJ is monitoring before shifting away from its ultra-easy stance. Currency traders are particularly sensitive to oil price swings given Japan's heavy energy import dependence.

Tokyo's May inflation figures due Friday will provide fresh insight into whether price pressures are building domestically. The data arrives at a critical juncture for the BOJ as it balances its 1% inflation target against the need to maintain financial stability. Market participants expect a cautious approach from policymakers.

With no clear direction from the BOJ and geopolitical risks persisting, the dollar-yen pair remains vulnerable to headline-driven moves. The currency market's focus stays split between central bank rhetoric and oil market volatility until clearer signals emerge.