The U.S. dollar weakened against its major counterparts in the European session on Tuesday, after a data showed that the nation's durable goods orders rose less than expected in June. Investors look ahead to the Fed meeting beginning today for more clues regarding the timing of tapering the stimulus program.

Data from the Commerce Department showed that durable goods orders climbed by 0.8 percent in June after spiking by an upwardly revised 3.2 percent in May.

Economists had been expecting orders to surge up by 2.1 percent compared to the 2.3 percent jump that had been reported for the previous month.

Excluding orders for transportation equipment, durable goods orders rose by 0.3 percent in June following a 0.5 percent increase in May. Ex-transportation orders were expected to climb by 0.8 percent.

U.S. treasury yields dropped for a second consecutive day. The yield on the benchmark 10-year treasury note fell 1 basis point to 1.264 percent.

The Fed is not expected to change the benchmark lending rate and the asset purchase program when it concludes its two-day meeting on Wednesday.

Fed officials had begun discussion on tapering in the June meeting, but Powell clarified that a decision regarding this matter would be made upon seeing a substantial improvement in the labor market.

The greenback reached a 5-day low of 1.1826 against the euro and near a 2-week low of 0.9136 against the franc, falling from its previous highs of 1.1770 and 0.9187, respectively. The greenback may locate support around 1.21 against the euro and 0.89 against the franc.

The greenback retreated to 0.7378 against the aussie, 0.6975 against the kiwi and 1.2554 against the loonie, after climbing to 0.7337, 6-day high of 0.6946 and a 4-day high of 1.2593, respectively earlier in the session. Should the greenback falls further, it is likely to test support around 0.75 against the aussie, 0.72 against the kiwi and 1.23 against the loonie.

Extending its early decline, the greenback hit a 6-day low of 109.84 against the yen. The next possible support for the dollar is seen around the 108.00 level.

Data from the Bank of Japan showed that Japan's services producer prices grew at a slower pace in June.

The services producer price index rose 1.4 percent year-on-year in June, slightly slower than the 1.5 percent increase seen in May.

The greenback pulled back to 1.3827 against the pound, from a high of 1.3767 seen at 4:15 am ET. Further fall in the currency may challenge support around the 1.41 level.

The latest Distributive Trades Survey data from the Confederation of British Industry showed that UK retail sales continued to expand in July, while orders grew the most since December 2010.

The retail sales balance came in at 23 percent in July, but slightly down from 25 percent in June. The balance was expected to fall to 21 percent.

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