European session review: USD weakens as focus shifts towards Fed’s policy meeting

USD declined against most of its major rivals in the European session on Tuesday, as worries about a potential default of the Chinese property developer Evergrande eased and focus shifted towards the Federal Reserve's two-day policy meeting.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, decreased  0.23% to 93.06.

Evergrande’s chairman Hui Ka Yuan told staff of the company that it would "walk out of its darkest moment, resume full-scale constructions as soon as possible".  However, this was not enough to overcome default fears. Nonetheless, markets grew more confident that the Chinese government would intervene in the situation with Evergrande and the contagion from the distress of the company would be limited.

The policy meeting of the U.S. central bank will start later today and its outcomes will be released on Wednesday. It is widely expected that at their September gathering the Fed officials will confirm their plans to start QE tapering by the end of the year but will hold off providing details or a timeline for a month or two.