Singapore, June 17 (Reuters) - The dollar fell on Wednesday ahead of the Federal Reserve's first monetary policy decision under new chairman Kevin Warsh, as continued optimism over the interim U.S.-Iran deal boosted risk appetite and reduced demand for the U.S. currency.

The yen did not rise much amid the weak dollar, and moved closer to the range that might prompt authorities to intervene, after the Bank of Japan raised interest rates in line with expectations.

Currency movements were largely limited at the start of the Asian session, as investors hesitated to make big moves ahead of the Federal Reserve's interest rate decision later in the day.

The euro settled at $1.1611, and the British pound was little changed at $1.3430.

The New Zealand dollar rose slightly to $0.5833.

The Federal Reserve is widely expected to leave interest rates unchanged at its first meeting under new chairman Warsh. However, the central bank's statement, economic projections, and press conference will be scrutinized for any signs of a shift away from its dovish stance, as officials increasingly favor tightening monetary policy to counter inflation risks.

Eric Wiseman, senior analyst and portfolio manager at MFS Investment Management, said, "The Federal Reserve is likely to signal a neutral direction for monetary policy going forward."

He continued, "(Warsh) will face a barrage of questions about how he expects the Federal Reserve to steer in the direction he has indicated for years... and he may not want to make any statements without first reaching a consensus within the board."

Against a basket of currencies, the dollar index slipped slightly to 99.53, giving up some of the gains it had made as a safe haven as details emerged of the interim agreement between the United States and Iran to end the war.

The yen was last trading at 160.43 against the dollar, putting traders on alert for any possible intervention by Japanese authorities to support the struggling currency.

The Bank of Japan raised interest rates on Tuesday to their highest level in 31 years in a historic move that came as part of its return to normal monetary policy, indicating its readiness to take further tightening measures as it focuses on curbing price pressures stemming from the energy shock caused by the Iran war.

The Australian dollar settled at $0.7066.

The Reserve Bank of Australia kept its key interest rate steady at 4.35 percent on Tuesday, citing a slowing economy but warning that it could raise rates again if necessary to control inflation.