European session review: USD weakens amid improved risk tolerance

USD fell against other major currencies in the European session on Monday as market sentiment was boosted by reports that Italy will begin removing its coronavirus lockdown measures next week. At the moment, the U.S. Dollar Index (DXY) is trading lower by 0.43% at 99.95.

The Italian Prime Minister Giuseppe Conte announced that a gradual easing of the lockdown restrictions in Italy, the longest in Europe, will begin on May 4. All public works considered strategic and some key export-oriented firms are resuming their work today.

France's Prime Minister Edouard Philippe is set to present the government's plan to unwind the country's lockdown measures to the French parliament on Tuesday, and the UK's Prime Minister Boris Johnson is expected to announce a similar plan for his country this week.

JPY rose against USD, EUR and CHF supported by the BoJ's latest decision to expand its stimulus to support the companies hit by the coronavirus crisis. The Japanese central bank did not change its interest rate but increased its purchases of corporate bonds and commercial paper, as it was speculated last week. The BoJ also said it expects Japan's economy to contract between 3.0% and 5.0% this year, and the core CPI to return to deflation.

Market participants are now awaiting the policy decisions by the Federal Reserve and European Central Bank (ECB), which will be announced on Wednesday and Thursday, respectively.