USD traded flat against other major currencies in the European session on Tuesday as investors focused on the Federal Reserve two-day policy meeting, slated to begin later in the day.
The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, stood at 104.57, unchanged from the previous close.
Markets do expect that the Fed’s chair Jerome Powell and his colleagues will leave the interest rate unchanged at 5.25-5.50% at their July gathering while giving clearer hints on a rate reduction in September.
Bets for a September rate cut by the U.S. central bank increased noticeably after the release of the U.S. June price growth data, which confirmed that inflation continues to ease and is slowly approaching the Fed's 2% target.
According to CME FedWatch, markets are now seeing a 100% probability the Fed will lower its rates in the first autumn month compared to 64.1% a month ago.
Another important event of the week - the release of the crucial U.S. July employment situation report - is scheduled for Friday. Expectations are for the report to indicate that conditions in the U.S. labour market continue gradually moderating.