USD/JPY attracts some sellers below 153.00, potential downside seems limited

• USD/JPY loses ground to near 152.95 in Tuesday's early Asian session, down 0.22% on the day. 
• Political and monetary policy uncertainty in Japan weighs on the Japanese Yen. 
• The prospect of less aggressive policy easing by the Fed might help limit the USD's losses. 

The USD/JPY pair loses ground to around 152.95 during the early Asian session on Tuesday. The pair edges lower as the US Dollar (USD) retreats from a nearly three-month high in the previous session. However, the downside for the pair might be limited amid the uncertainty surrounding the next government's makeup and the Bank of Japan's (BoJ) rate hike plan. 

An election loss by Japan's ruling coalition raises political and monetary policy uncertainty and might exert some selling pressure on the Japanese Yen (JPY). "The ruling LDP and its coalition partner lost their majority in the lower house, raising concerns about the shape and policy direction of the next government. Markets have also trimmed BoJ tightening expectations marginally (helping boost local stocks)," noted Scotiabank's Chief FX Strategist Shaun Osborne.

The BoJ interest rate decision will take center stage on Thursday. Nearly 86% of economists polled by Reuters anticipate the Japanese central bank to leave its rates unchanged at its October meeting on Thursday. 

Elsewhere, data released by the Statistics Bureau of Japan showed on Tuesday that the country's Unemployment Rate ticked lower to 2.4% in September, down from the previous reading and the market consensus of 2.5%. 

The bets for a less aggressive policy easing by the Federal Reserve (Fed) could provide some support to the Greenback in the near term. According to the CME FedWatch tool, traders have priced in a nearly 96.8% chance of a usual size rate cut of 25 basis points (bps) in November and expect a similar move in the December meeting.

Nonetheless, traders will keep an eye on the advanced US Gross Domestic Product (GDP) for the third quarter, the Personal Consumption Expenditure Price Index (PCE) for September, the ISM Manufacturing PMI, and the Nonfarm Payrolls (NFP) data for October, which will be released this week for fresh impetus. Any signs of weakness in the US economy or the labor market could undermine the USD against the JPY.