The Australian dollar strengthened against its major counterparts in the European session on Tuesday, while the Japanese yen fell, as European shares rose following China's decision to reduce the quarantine period for travelers from overseas.

China slashed quarantine time to seven days for international travelers and close contacts and home isolation to three days, helping lift sentiment.

The announcement fuelled optimism about economic recovery and lifted the demand for commodities.

In addition, the People's Bank of China promised that it would keep monetary policy supportive to boost economic recovery.

The central bank hinted at the stimulus that would possibly aim to boost credit instead of cutting interest rates.

The aussie advanced to 6-day highs of 0.6965 against the greenback, 94.52 against the yen and 1.1049 against the kiwi, from its early lows of 0.6916, 93.46 and 1.0976, respectively. The aussie is likely to find resistance around 0.71 against the greenback, 96.00 against the yen and 1.12 against the kiwi.

The aussie edged up to 1.5208 versus the euro, after falling to 1.5294 at 9:45 pm ET. On the upside, 1.49 is seen as the next resistance level for the aussie.

Against the loonie, the aussie rebounded to 0.8937 from near a 2-week low of 0.8900 seen at 9:45 pm ET. If the aussie rises further, 0.92 is likely seen as its next resistance level.

The yen touched a record low of 142.54 against the franc, from a high of 141.34 set at 9:45 pm ET.

The yen declined to 5-day lows of 135.98 against the greenback, 166.85 against the pound and 143.98 against the euro, off its prior highs of 135.11, 165.72 and 142.86, respectively. The yen is seen finding support around 140.00 against the greenback, 173.00 against the pound and 145.00 against the euro.

Retreating from its early highs of 85.04 against the kiwi and 104.95 against the loonie, the yen slipped to a 6-day low of 85.69 and near a 3-week low of 105.95, respectively. The yen may locate support around 108.00 against the kiwi and 108.00 against the loonie.

Looking ahead, U.S. consumer confidence index for June, FHFA's house price index and S&P/Case-Shiller home price index for April, as well as wholesale inventories and advance goods trade balance for May will be released in the New York session.

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