The US dollar continues to remain in favor among investors against other leading currencies, including safe haven Japanese yen as fears about the economic impact of the latest Omicron variant dictate the market sentiment into Tuesday. At the time of writing, the US dollar index DXY is trading around 96.22.

The greenback is also enjoying support from an uptick in US Treasury yields during the previous session, giving it an edge over other majors. There is some optimism in global markets that the Omicron variant could be milder than previously feared and may not require stringent lockdowns and restrictions to be enforced around the world.

This expectation has helped other riskier currencies, such as the AUD also post a strong performance on Tuesday. AUD/USD is also enjoying some strength ahead of the upcoming RBA meeting as investors wait to see if the Aussie central bank offers some hawkish hints, following the Fed’s latest comments in this direction. During the previous session, the commodity currency gained as much as 0.7% and posted the strongest performance seen in seven weeks.

Meanwhile, the cautiously optimistic mood surrounding the Omicron variant have sent other leading safe haven currencies lower. While the JPY has lost 0.6% of its value against the US dollar in the previous session, the CHF registered the steepest decline seen in almost three months during the period.

The common currency Euro, however, continues to trade under pressure, losing as much as 0.2% of its value against the US currency. Investors continue to focus on the Fed’s hawkish tilt against the ECB’s extension of its dovish stance for longer, keeping EUR/USD bearish.