The U.S. dollar came under pressure against its most major counterparts in the European session on Tuesday, as investors hope that a successful vaccine rollout and prospects of the U.S. fiscal stimulus could spur the economic recovery.

Expectations of the U.S. fiscal stimulus continued to support reflation trades, driving investments into riskier assets.

U.S. Treasury yields have risen to their highest levels since March amid a sell-off in bonds.

The minutes from the U.S. Federal Reserve's January meeting will be published on Wednesday. It may offer clues about the discussions regarding the tapering of the asset purchase programme among Fed members.

Last week, Fed Chair Jerome Powell committed to maintain an accommodative monetary policy to attain employment goal.

The greenback dropped to 1.2170 against the euro, its weakest level since January 27. The greenback is likely to find support around the 1.24 region, if it falls again.

The flash estimate from Eurostat showed that the euro area economy contracted at a slightly slower than initially estimated pace in the fourth quarter amid Covid-19 control measures.

Gross domestic product declined 0.6 percent sequentially instead of 0.7 percent estimated previously. The fall reversed a record 12.4 percent rebound seen in the third quarter.

The greenback reached as low as 0.8871 against the franc, setting nearly a 3-week low. Next key support for the greenback is likely seen around the 0.86 level.

The greenback eased off from an 8-day high of 105.63 versus the yen, touching 105.18. The next possible support for the greenback is seen around the 104.00 level.

The greenback declined to near a 4-week low of 1.2610 against the loonie, compared to Monday's close of 1.2633. The greenback is poised to find support around the 1.24 level.

In contrast, the greenback recovered to 0.7776 against the aussie and 0.7235 versus the kiwi, from its early near a 5-week low of 0.7805 and near a 6-week low of 0.7268, respectively. On the upside, 0.76 and 0.70 are possibly seen as the next resistance levels for the greenback against the aussie and the kiwi, respectively.

The U.S. currency bounced off from near a 3-year low of 1.3952 versus the pound, with the pair trading at 1.3905. The greenback is seen finding resistance around the 1.37 level.

New York Fed's empire manufacturing survey for February is due out in the New York session.