The euro climbed against its major counterparts in the European session on Monday, while the U.S. dollar dropped, as markets trimmed expectations of a larger Fed rate hike and China's central bank affirmed a stronger support to the economy, helping lift investor sentiment.

Investors expect a 75 basis-point rate hike from the Fed at its meeting due next week after several policy makers rejected the possibility of a 100 basis-point move.

The European Central Bank will announce its decision on Thursday, when it will deliver a 25 basis-point rate hike amid a soaring inflation.

The ECB is expected to unveil details of the new tool aimed to ease pressure on borrowing costs for the bloc's indebted nations.

Also in focus is the resumption of gas supplies through the Nord Stream 1 pipeline, which is scheduled to stop maintenance on Thursday.

The euro appreciated to 1-week highs of 1.0175 against the greenback and 0.9916 against the franc, off its early lows of 1.0079 and 0.9837, respectively. The euro is seen locating resistance around 1.08 against the greenback and 1.05 against the franc.

The euro touched 140.65 against the yen, its strongest level since July 5. On the upside, 143.00 is likely seen as its next resistance level.

The euro rose to 4-day highs of 1.3193 against the loonie and 1.6451 against the kiwi, reversing from its early 4-day low of 1.3103 and a 2-1/2-month low of 1.6302, respectively. The euro is poised to find resistance around 1.35 against the loonie and 1.69 against the kiwi.

The euro bounced off to 1.4870 against aussie, from its Asian session's 4-day low of 1.4814. The euro may find resistance around the 1.50 level.

In contrast, the euro was down against the pound at 0.8471. If the currency falls further, it is likely to test support around the 0.83 region.

The greenback dropped to a 4-day low of 137.89 against the yen and a 1-week low of 1.1991 against the pound, from its previous highs of 138.57 and 1.1863, respectively. The next possible support for the greenback is seen around 120.00 against the yen and 1.26 against the pound.

The greenback eased from its prior highs of 1.3025 against the loonie and 0.6784 against the aussie, falling to a 4-day low of 1.2964 and a 1-week low of 0.6843, respectively. Should the greenback falls further, it is likely to test support near 1.26 against the loonie and 0.70 against the aussie.

On the other hand, the greenback edged up to 0.9788 against the franc, from a 10-day low of 0.9732 seen at 6:15 am ET. Next near term resistance for the currency is seen around the 1.00 level.

The greenback recovered to 0.6155 against the kiwi, after dropping to a 10-day low of 0.6201 at 9:15 pm ET. The greenback is likely to find resistance around the 0.59 level.

U.S. NAHB housing market index for July is scheduled for release in the New York session.

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