Hong Kong, Aug. 21 (BridgeNews) - Consolidation set in before the Federal Open Market Committee meeting later Tuesday, which is dominating market attention this week. The dollar retained the firmer tone that emerged overnight, but was unable to extend overnight gains except against the yen, which maintained its heavy tone on account of further weakness in the Nikkei. Dollar/yen saw a tight range of 120.72-120.92, narrowly exceeding the overnight high of 120.89. Japanese Finance Minister Masajuro Shiokawa said Tuesday morning that the government is not considering foreign exchange intervention now, although it might undertake intervention if volatility in the market becomes excessive. Shiokawa said recent yen strength doesn't reflect fundamentals and foreign exchange levels are likely to "normalize" soon. Shiokawa's comments dampened fears of intervention and caused a minor dip in the dollar/yen before bouncing back slightly on pre-FOMC short-covering activities. Euro/yen buying near 110.20 also lent support, but there was talk of options related selling near 121.00. The weak stock market continued to make the yen heavy. The Nikkei 225 Stock Average closed the morning down 22.20 points or 0.2% to 11,235.74, reversing earlier gains on short covering following the rebound on Wall Street overnight. Generally, investors stayed on the sidelines as they awaited the outcome of the FOMC meeting. In other currency trading, euro/dollar slipped from 0.9139 to 0.9121 on U.S. bank selling, amidst talk of sell-stops below 0.9090 and expectations of a fall on profit taking before the FOMC meeting. Euro/yen stalled in a 110.17 to 110.43 range.