European session review: USD mixed as focus shifts to Fed meeting and debate in Congress on next round of coronavirus aid

USD traded mixed against other major currencies in the European session on Tuesday as investors turned their attention to the upcoming meeting of the U.S. Federal Reserve and negotiations on the next round of the coronavirus aid in the U.S. Congress. The U.S. currency fell against JPY, GBP and CHF, but rose against the rest of major rivals. The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, increased 0.12% to 93.78.

The Fed will begin its two-day meeting later today and investors expect the U.S. central bank will signal it remains supportive of the economy as the country struggles in its fight against the COVID-19 pandemic. At its June meeting, the Fed left its interest rates unchanged and said it expects to hold the target range for the federal funds rate at the current level at least through 2022 or until the economy “had weathered recent events.”

On Monday, the U.S. Senate Majority Leader Mitch  McConnell presented the HEALS Act, a $1 trillion coronavirus aid package that includes money for health, schools, liability protection, and small businesses, $1200 stimulus payments to most Americans and $200 weekly unemployment supplement. He urged Democrats to compromise with Republicans on the plan, as unemployment benefits are to expire at the end of this week.

Investor sentiment was also dampened by growing worries about the potential for a worsening of the coronavirus pandemic. The UK's PM Boris Johnson warned today that they were seeing signs of the second virus wave in some other European countries. According to Johns Hopkins University, the number of confirmed global cases of the COVID-19 increased to 16,495,309, and the U.S. reported 4,294,770 cases of the coronavirus, the most in the world.