European session review: USD weakens amid improved risk sentiment

USD fell against most major currencies in the European session on Monday,  as global recovery expectations fueled risk appetite. 

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, dropped 0.45% to 96.73.

The PMI data, released last week, pointed to a recovery in major economies' factory activity, and the U.S. employment report revealed that the country's economy regained millions more jobs in June from May, as COVID-19 restrictions eased. 

In addition, expectations that China's economy is to rebound strongly also bolstered broader risk sentiment. Bloomberg reported that The Securities Times, China's influential state media, said fostering a “healthy” bull market after the coronavirus pandemic was now more important to the Chinese economy than ever.

Meanwhile, the U.S. currency continued to grapple with growing worries about an increase in coronavirus cases in several U.S. states, including Florida, Texas and California, and the possibility of renewed lockdowns to contain the virus spread.

Market participants are also awaiting reports on the U.S. services sector - from Markit at 13:45 GMT and ISM at 14:00 GMT - which are expected to show that the activity in the sector stopped contracting in June.