USD weakened against most of its major counterparts in the European session on Monday as investors' risk appetite improved following more positive news on COVID-19 vaccine development as well as stronger-than-expected economic data from Japan and China, pointing to a post-COVID recovery in the world's second- and third-largest economies.

Moderna (MRNA) announced on Monday that its coronavirus vaccine candidate reached a 94.5% efficacy rate in late-stage trials. Thus, the efficacy rate of Moderna's vaccine surpassed the 90%-threshold reported by Pfizer (PFE)/BioNTech (BNTX) last week. The announcements of effective COVID-19 vaccines raised hope for a swift economic recovery.

Japan's Cabinet Office reported that the country’s GDP surged by 21.4% y-o-y in the third quarter of 2020. That was the largest advance on record and exceeded economists' expectations for a jump of 18.9 percent y-o-y following the 28.8 percent y-o-y tumble in the second quarter. Meanwhile, China's industrial production (+6.9 percent y-o-y) and retail sales (+4.3 percent y-o-y) rose at a faster-than-forecast pace in October as the Chinese economy shrugged off the negative impact of COVID-19.

Market optimism was also supported by reports that President-elect Joe Biden's advisers opposed a nation-wide lockdown but preferred targeted measures to control the spikes in the U.S. COVID-19 cases.