The Fed is scheduled to begin a two-day meeting on later on Tuesday, with the latest monetary policy decision due on Wednesday. While the Fed is likely to leave interest rates unchanged, the accompanying statement could hint at the first rate hike as early as the next meeting in mid-March.
Geopolitical tensions also remained on investors' radar after tensions grow between the United States and Russia over Ukraine, following the United States saying it would put its troops on "heightened alert" for a possible deployment due to escalating tensions on the Russia-Ukraine border.
At closing bell, the 225-issue Nikkei Stock Average declined 457.03 points, or 1.66%, to 27,131.34. The broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 33.25 points, or 1.72%, to 1,896.62.
Technology stocks weighed on the market after their U.S. peers lost ground overnight, with SoftBank Group slumping 5.3%, while Tokyo Electron lost 2.7%.
Toyota Motor was a notable decliner, skidding down 1.8%, after announcing it would suspend production at 11 local factories due to COVID-related supply chain issues.
CURRENCY NEWS: The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 95.97, rising sharply from levels around 95.6. The Japanese yen traded at 113.79 per dollar, strengthening slightly from around the 114 level previously.
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