The U.S. Dollar moved higher, the Euro declined, and the Yen steadied on Monday as markets reversed some of Friday’s sell-off on news of the detection of the Omicron variant in southern Africa.

Markets were calmer on Monday, U.S. stock futures and oil prices rallied, as investors adopted a more balanced view, awaiting more clarity on the effect of the latest variant.

In addition, the U.S. Dollar index moved higher from its largest one-day drop at the end of last week since May. The index edged up 0.1% at 96.326.

Following a rise against the Dollar on Friday, the Euro was down 0.4% on Monday at $1.12665.

Ulrich Leuchtmann, head of FX and commodity research at Commerzbank said the Euro had initially benefitted from the Omicron variant due to the European Central Bank’s dovish stance, Reuters reports.

"If Omicron leads to lockdowns and a renewed reduction in economic activity on a global scale all rate hike expectations turn out to be in vain and then they will be priced out again pretty quickly," he stated

"And which currencies will be the relative winners? Of course, the ones where rate hikes were never priced in very much in the first place. And those were EUR, JPY and CHF."

Moreover, the Japanese Yen rose around 0.2% on Monday against the Dollar at 113.33, whereas the Euro-Yen dropped to a nine-month low. The Swiss Franc also edged down 0.4% to 0.9256, following its largest one-day rise against the Dollar since June 2016 on Friday.

According to analysts, volatility will likely stay in currency markets until there is a greater understanding of the new variant. "Vaccine efficacy results with the next two weeks will be the most important headline to watch out for as well as whether symptoms are different from that of other variants," said Nomura analyst Jordan Rochester.