The U.S. dollar climbed against its major counterparts in the European session on Tuesday, as traders awaited the Federal Reserve's latest policy decision, which is widely expected to raise interest rate by a quarter-point for the first time in this year.

The Fed kicks off its two-day policy meeting today, with a rate announcement due on Wednesday.

Economists widely expect the Fed to raise benchmark rate by 25 basis points to 1.75 percent from the current 1.50 percent.

Besides the rate announcement, the Fed will issue its updated its quarterly forecasts, which show its projections for growth, unemployment, inflation and the possible pace of its rate increases over the next three years.

The press conference from the new Fed Chairman Jerome Powell is likely to garner attraction, as he hinted at a possible upgrade to four rate hikes in his Congressional testimony last month.

In its December meeting, the Fed's dot-plot forecasts showed three rate hikes for 2018.

The currency showed mixed trading against its major rivals in the Asian session. While it rose against the yen and the franc, it held steady against the euro and the pound.

The greenback appreciated to 0.9544 against the Swiss franc, from a low of 0.9502 hit at 5:15 am ET. The next possible resistance for the greenback is seen around the 0.97 level.

The greenback edged up to 1.2293 against the euro, after having fallen to 1.2354 at 3:30 am ET. On the upside, 1.20 is seen as the next resistance level for the greenback.

Figures from Destatis showed that German producer price inflation eased to a 14-month low in February.

Producer prices climbed 1.8 percent year-on-year in February, slower than the 2.1 percent increase seen in January. This was the lowest rate since December 2016 and weaker than the expected 2 percent.

Reversing from an early low of 1.4067 against the pound, the greenback advanced to 1.4002. The greenback is seen finding resistance around the 1.39 level.

Data from the Office for National Statistics showed that UK inflation eased to a 7-month low in February.

Consumer price inflation slowed more-than-expected to 2.7 percent in February from 3 percent in January. This was the weakest since last July, when prices rose 2.6 percent. Economists had forecast an annual rate of 2.8 percent.

The greenback recovered to 1.3087 against the loonie and 0.7206 against the kiwi, from its early lows of 1.3058 and 0.7249, respectively. If the greenback rises further, 1.32 and 0.70 are likely seen as its next resistance levels against the loonie and the kiwi, respectively.

The greenback rose back to 106.55 against the yen, just few pips short of a 6-day high of 106.61 set at 3:30 am ET. The greenback is poised to test resistance around the 108.00 level.

Data from the Cabinet Office showed that Japan's leading index declined less than initially estimated in January.

The leading index, which measures the future economic activity, dropped to a 6-month low of 105.6 in January from 106.8 in December. The reading was above the flash estimate of 104.8.

The greenback recovered modestly to 0.7703 against the aussie, from an early low of 0.7721. Further uptrend may see the greenback challenging resistance around the 0.76 level.

Looking ahead, Eurozone advanced consumer confidence index for March will be out at 11:00 am ET.

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