The U.S. dollar dropped against its major counterparts in the European session on Tuesday, while the Japanese yen climbed, as a warning from Moderna Chief Executive Officer about the efficacy of the current vaccines to resist the Omicron coronavirus variant triggered a sell-off in European shares.

In an interview with the Financial Times, Moderna CEO Stephane Bancel said that the high number of mutations on the spike protein and the rapid spread of the variant in South Africa indicated that the current vaccines may need to be modified next year.

His comments sparked concerns about imposing more restrictions and lockdowns to counter the spread of Omicron Covid-19 variant.

U.S. treasury yields tumbled as investors sought safe-haven treasuries amid concerns about the economic impact of the strain.

The benchmark yield on the 10-year note fell 1.427 percent. Yields move inversely to bond prices.

In prepared testimony before the Senate Banking Committee, Federal Reserve Chair Jerome Powell said that the new strain clouded the economic outlook and price pressures could last longer than earlier estimate.

The variant posed downside risks to employment and economic activity and increased uncertainty for inflation, he added.

The U.S. currency depreciated to a 6-day low of 1.3371 against the pound and near a 2-week low of 1.1373 against the euro, following its prior highs of 1.3305 and 1.1284, respectively. The greenback is seen finding support around 1.35 against the pound and 1.15 against the euro.

The greenback reversed from its early highs of 113.89 against the yen and 0.9235 against the franc, declining to a 1-1/2-month low of 112.68 and near a 3-week low of 0.9172, respectively. The greenback may find support near 110.00 against the yen and 0.90 against the franc.

In contrast, the greenback jumped to 1.2812 against the loonie, its highest level in more than two months. On the upside, 1.20 is possibly seen as its next resistance level.

The greenback advanced to more than 1-year highs of 0.7093 against the aussie and 0.6781 against the kiwi in late Asian deals and held steady thereafter. The greenback had ended yesterday's trading at 0.7141 against the aussie and 0.6825 against the kiwi.

The yen held firm against the pound at near a 2-month high of 150.43. The next likely resistance for the currency is seen around the 148.00 level.

The yen rose to 88.03 against the loonie, its strongest level since October 6. The currency is likely to find resistance around the 86.00 level.

The yen edged up to 122.65 against the franc and 127.84 against the euro, off its early 5-day low of 123.37 and a 4-day low of 128.60, respectively. If the yen rises further, it may find resistance around 119.00 against the franc and 126.00 against the euro.

The yen held steady against the aussie and the kiwi, after climbing to near 2-month highs of 80.18 and 76.66, respectively in late Asian trading. The yen had closed yesterday's deals at 81.06 against the aussie and 77.46 against the kiwi.

Looking ahead, Canada GDP data for the third quarter, U.S. FHFA's house price index and S&P/Case-Shiller home price index for September and consumer confidence index for November will be featured in the New York session.

Federal Reserve Chair Jerome Powell will testify on the CARES Act, along with Treasury Secretary Janet Yellen before the Senate Banking Committee in Washington DC at 10:00 am ET.

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