The market mood improved on Tuesday as market players rushed to price in a de-escalation of the Russia-Ukraine tensions after the Russian Minister of Defense announced that some of the troops at the border would return to their bases.

Nevertheless, comments from Russian President Vladimir Putin released during the American afternoon were not that encouraging.  Putin said that he is not satisfied with assurances that Ukraine will not become a NATO member in the near future and wants the issue to be settled right now or soon through a negotiating process.

Also, German Chancellor Olaf Scholz is in Moscow undergoing diplomatic talks. A key gas line from Russia to Germany may come out of order in the event of a war.  Finally, UK PM Boris Johnson noted Russia is giving mixed signals and continues preparation to respond to a Russian invasion.

Financial markets maintained the upbeat tone through the European and American sessions, and indexes in both continents posted substantial gains. Wall Street, however, retreated from intraday highs ahead of the close.

Demand for the dollar receded, but its decline was partially offset by renewed strength in government bond yields. The US 10-year Treasury note yielded as much as 2.05% on Tuesday.

The EUR/USD pair settled in the 1.1350 region, while the GBP/USD hovers around 1.3540. The AUD/USD pair recovered to 0.7150, while USD/CAD trades in the 1.2730 price zone.

Commodities gave up, with gold plummeting to the current $1,850 area. Crude oil prices shed a good bunch of their recent gains, with WTI currently trading at around $91.60 a barrel.

The focus now shifts to US Retail Sales and FOMC Meeting Minutes.