REUTERS

The dollar retreated slightly on Tuesday but held on to most of the previous session’s gains on lingering optimism over a tariff deal between the United States and China, which tapped the brakes on a trade war between the world’s two largest economies.

Washington and Beijing on Monday announced an agreement to slash the massive tariffs they had imposed on each other for 90 days, sparking a relief rally across markets that swept up global stocks and sent the dollar surging.

The situation is still very dollar-centric according to Kit Juckes, chief FX strategist at Societe Generale, who said the dollar’s rally on positive sentiment from US-China talks was helped by the short-term positioning in the currency being squeezed out a little bit.

“Looking at it today, we’re bouncing back. It’s a little bit quieter.”

Versus the Japanese yen, the dollar was down 0.45 percent at 147.82 yen, having rallied more than 2 percent on Monday. The euro rose 0.18 percent to $1.1107, after sliding 1.4% overnight.

The dollar fell 0.56 percent against the Swiss franc to 0.8405, reversing some of Monday’s 1.6 percent jump. Sterling ticked up 0.22 percent to $1.3207.