When typing a password, for privacy reasons, the keyboard won't show, neither the dots that represent the password, but don't worry, what you're typing is in there.
It would be easier if you use the "Text Input" section in ALI, that way you're making sure you're not typing the password wrong.
So you write the password you want in the "Text Input" window, tap the password field on the iPhone screen, and then click "Send" from the "Text Input" section in ALI.
Mention: on iOS 26 the keyboard will cover the confirm button. In that case make sure that after sending the password to the phone you press "Enter" on your keyboard.