On Monday, the S&P 500 index hit a record high following a slew of speeches by Federal Reserve officials. St. Louis President James Bullard said positive labor market trends make cuts to bond purchases more likely, while Dallas President Richard Fisher said that rising long-term U.S. Treasury yields suggest that investors are expecting a reduction in stimulus.
The speeches came before officials go into their "blackout" period before the two-day Fed policy meeting that starts next Tuesday.
(Read more: Fed taper won't bother investors: JPM's Lee)
Nikkei 0.2% lower
Japanese stocks took a breather after closing at a one-week high in the previous session. The pullback came even as dollar-yen climbed back above the 103 handle, trading near last week's six-month peak of 103.38.
A weak business outlook may be weighing on sentiment after a government survey showed sentiment among large manufacturers worsened in the October-December period.
Exporters with large exposure to Europe are in focus after the euro scaled a five-year peak against the yen. Sony fell 2 percent while Panasonic and Honda Motor fell 1 percent each.
(Read more: And the next driver for Japan stocks is…)
China's benchmark Shanghai Composite traded in a narrow 19-point range as the government's annual Central Economic Work Conference kicked off on Tuesday. Sentiment was dampened on news that People's Bank of China will be skipping Tuesday's open market operations.
Meanwhile, the yuan hit a fresh record high against the dollar for a second consecutive session at 6.0703.
(Read more: Is this currency the 'best on the planet?')