The Australian and the Canadian dollars appreciated against their major counterparts in the European session on Tuesday, amid firmer oil prices following a retreat in the U.S. dollar and on hopes of a U.S. fiscal stimulus package from the Democratic-led U.S. government.

President-elect Joe Biden promised to roll out "trillions" of additional COVID-19 stimulus measures to support the economic recovery from the pandemic.

Details of the proposed plan will be unveiled this week.

Investors expect that Saudi Arabia's pledge to cut production last week will offset a slowdown in the demand due to the virus restrictions.

The American Petroleum Institute will release its crude inventory data later in the day, with analysts expecting a fall for a fifth consecutive week.

The aussie spiked up to 0.7737 against the greenback and 80.59 against the yen, after falling to 0.7687 and 80.14, respectively in early deals. The aussie is seen finding resistance around 0.81 against the greenback and 82.00 against the yen.

The aussie reversed from its early lows of 1.5793 against the euro and 0.9826 against the loonie and was trading at 1.5733 and 0.9858, respectively. If the aussie continues its rise, 1.54 and 1.00 are possibly seen as its next resistance levels against the euro and the loonie, respectively.

The Australian currency rallied to 1.0764 against the kiwi, its strongest level since October 2020. The aussie is likely to find resistance around the 1.09 level.

The loonie was up at 1.2736 versus the greenback and 81.79 versus the yen, compared to its prior lows of 1.2791 and 81.46, respectively. The next possible resistance for the loonie is seen around 1.25 versus the greenback and 84 versus the yen.

The loonie climbed to near a 4-week high of 1.5494 against the euro, from a low of 1.5537 seen at 7:45 pm ET. On the upside, 1.52 is likely seen as its next resistance level.

Looking ahead, Federal Reserve Governor Lael Brainard is due to speak at an online Fed symposium on artificial intelligence at 8:35 am ET.