Dollar Index Recovered Most of Its Losses

On Monday, the risk-on sentiment that helped to boost the euro and weighed on the U.S. dollar gradually faded, after Russia said there were no concrete plans for a summit over Ukraine between the Russian and U.S. presidents.

Reports that leaders agreed in principle to discuss finding a possible path out of the region’s biggest military crisis in decades prompted investors to pull capital away from safe-havens.

Still, tensions continued to run high. Russia’s FSB made an interesting announcement. It announced that a shell fired from Ukrainian territory destroyed a border guard post. In the meantime, Ukrainian authorities warned that hackers were preparing to launch major attacks on Tuesday.

Dollar, euro, and other currencies

The single currency which was gaining close to 0.6% at one stage during morning trading, slowly abandoned those gains. As of 12:24 GMT, the euro was up a meagre 0.13% at $1.1334. 

It also benefited from data showing the euro zone’s economic recovery regaining momentum as the easing of Covid-19 restrictions boosts the euro zone’s dominant service industry.

Meanwhile, the dollar index which tracks the U.S. currency against a basket of currencies recovered from most of its losses. The index was down only 0.13% against major rival currencies.

Conversely, safe-haven currencies which benefited from the tensions were back in favor. 

The Swiss franc gained 0.54% to $0.9164. 

The world’s largest cryptocurrency which was on a recovery path went on a downward path again. Bitcoin was down about 6% and trading at about $37,500, its worst result since in more than two weeks.

Traders are closely monitoring the Federal Reserve’s decisions. They would like to learn more about the speed and size of interest rate hikes in major markets. This week, currency markets participants will be closely watching remarks from the policymakers.