U.S. Dollar Falls As FOMC Prepares To Meet

The U.S. dollar weakened against most major currencies in the early European session on Tuesday, as investors remain cautious ahead of central bank meetings in the U.S. and Japan this week.

The U.S. Federal Reserve is scheduled to begin a two-day monetary policy meeting later today. The central bank is widely expected to leave interest rates unchanged, but the bank's accompanying statement is likely to be in focus, as investors attempt to gauge the outlook for the next rate hike.

The Bank of Japan will announce its interest rate decision this Friday. Speculations are rife that the BOJ is likely to take additional easing steps at the monetary policy meeting.

In the Asian trading today, the U.S. dollar held steady against its major rivals.

In the early European session, the U.S. dollar fell to 4-day lows of 1.1020 against the euro and 0.9845 against the Swiss franc, from early highs of 1.0983 and 0.9864, respectively. The greenback may test support near 1.14 against the euro and 0.96 against the Swiss franc.

Against the Australian and the New Zealand dollars, the greenback slid to a 1-week low of 0.7536 and a 6-day low of 0.7063 from early highs of 0.7463 and 0.6984, respectively. If the greenback extends its downtrend, it is likely to find support around 0.77 against the aussie and 0.73 against the kiwi.

The greenback dropped to nearly a 2-week low of 104.23 against the yen, from an early high of 105.89. On the downside, 100.00 is seen as the next support level for the greenback.

Against the Canadian dollar, the greenback edged down to 1.3179 from an early high of 1.3231. The greenback is likely to find support near the 1.28 region.

Looking ahead, U.K. BBA mortgage approvals for June is due to be released at 4:30 am ET.

In the New York session, flash estimate of Markit's U.S. service sector PMI for July, U.S. consumer confidence index for July, new home sales data for June, U.S. S&P Case-Shiller home price index for May and U.S. Richmond Fed manufacturing index for July are slated for release.