USD strengthened against its major counterparts in the European session on Tuesday on optimism over an economic rebound in the U.S. 

The strong employment and non-manufacturing PMI data for March added to optimism about a swift economic recovery in the U.S. amid accelerating vaccinations and massive stimulus.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, rose 0.17% to 92.76.

On Friday, the March employment report revealed 916,000 additions to nonfarm payrolls, the most in seven months, and a 6.0% unemployment rate, the lowest rate in a year. Yesterday, the ISM Non-Manufacturing Index rose to a record 63.7% in March from 55.3% in February. 

Investors also digested the comments by the Cleveland Fed president Loretta Mester, who told CNBC on Monday that near-term tapering of bond purchases is unlikely. She also noted that the Fed is "still far from" its policy goals and needs to be "very deliberately patient" in its approach to monetary policy. This eased rate hike bets.