The U.S. dollar firmed against its major opponents in the European session on Tuesday, as investors await the Federal Reserve's monetary policy meeting beginning today for more clues about its future path amid rising inflation.

The Fed meeting ends on Wednesday, with economists expecting no change to rate and QE program.

Fed officials are likely to begin discussions about pulling back stimulus measures that were put in place to fight the pandemic.

Investors will pay close attention to Powell's comments for indications about the strength of the economic recovery and the possible tapering of its bond buying program.

There was little reaction to mixed data on U.S. producer inflation and retail sales.

Data from the Labor Department showed that U.S. producer prices increased more than expected in May.

The Labor Department said its producer price index for final demand advanced by 0.8 in May after climbing by 0.6 percent in April. Economists had expected another 0.6 percent increase.

Data from the Commerce Department showed that retail sales tumbled more than expected in the month of May.

The report said retail sales plunged by 1.3 percent in May following an upwardly revised 0.9 percent increase in April.

Economists had expected retail sales to slump by 0.8 percent compared to the unchanged reading originally reported for the previous month.

The greenback showed mixed trading against its major rivals in the Asian session. While it rose against the franc and the yen, it held steady against the euro. Versus the pound, it dropped.

The greenback advanced to an 8-day high of 0.9008 against the franc, from a 4-day low of 0.8966 seen at 3:45 am ET. At Monday's close, the pair was valued at 0.8993. The greenback is seen finding resistance around the 0.92 level.

In its quarterly economic forecast, the State Secretariat for Economic Affairs said that the Swiss economy is expected to grow faster than previously estimated this year as the easing of coronavirus measures triggered a swift recovery.

The expert group of the federal government forecast gross domestic product to grow 3.6 percent this year instead of 3 percent growth estimated previously. The projection for 2022 was retained at 3.3 percent.

The greenback reached as high as 1.2101 versus the euro, after a 4-day decline to 1.2147 at 3:45 am ET. The pair had closed Monday's deals at 1.2119. If the greenback rises further, it may locate resistance around the 1.20 level.

Data from Eurostat showed that the euro area trade surplus declined sharply in April as exports declined amid rising imports.

The trade surplus narrowed to EUR 9.4 billion from EUR 18.3 billion in March. This was the smallest surplus since May 2020.

Reversing from an early 4-day low of 1.4129 against the pound, the greenback touched near a 5-week high of 1.4034. The pound-greenback pair had finished yesterday's trading session at 1.4104. The currency is likely to challenge resistance around the 1.37 level.

The greenback climbed to near a 5-week high of 1.2199 against the loonie, near 2-week highs of 110.17 against the yen and 0.7685 against the aussie, up from Monday's closing values of 1.2138, 110.06 and 0.7710, respectively. The next possible resistance for the dollar is seen around 1.25 against the loonie, 112 against the yen and 0.75 against the aussie.

The greenback moved up to a 4-day high of 0.7122 against the kiwi, after having fallen to a 4-day low of 0.7161 at 2:15 am ET. At yesterday's trading close, the pair was quoted at 0.7137. The greenback may test resistance around the 0.70 region, should it rallies again.

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