• 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.