ZURICH: The Swiss franc strengthened against the dollar on Tuesday, diverging from the euro, which weakened again against the greenback after Monday's dovish comments from the European Central Bank chief.
ECB President Mario Draghi reiterated the central bank's readiness to cut interest rates - including the zero deposit rate - further if the euro zone economy deteriorates, sending the euro to session lows against the dollar.
"The prospects of negative deposit rates in particular will continue to send shivers down the spines of EUR bulls," analysts at Credit Agricole said in a statement.
"As Draghi noted prospects for further easing will be highly data dependent which in turn means that the EUR will be more data sensitive in the weeks ahead," Credit Agricole said.
The Swiss franc has tracked the euro closely since the Swiss National Bank capped the franc in September 2011 to prevent the soaring franc from tipping the economy into recession after safe haven buyers had bid it up to record levels.
German economic data is expected to show a decline in industrial orders later on Tuesday, while the Swiss unemployment rate fell in April.
Meanwhile, the Swiss National Bank's foreign exchange reserves fell to 433.645 billion Swiss francs ($461.67 billion)in April.
On Wednesday, the focus will fall on Swiss inflation reading, expected to remain unchanged at -0.6 percent on an annual basis.
The franc strengthened 0.1 percent against the dollar to trade at 0.937 by 0743 GMT compared to the New York close.
The franc was little changed against the euro at 1.2265.
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