Euro Falls against Safe-havens as Ukraine Tensions Rise

On Thursday, the Euro faltered against safe-haven currencies as fears of an imminent Russian invasion of Ukraine significantly intensified.

The EUR to USD exchange rate plummeted 0.68% to $1.12, the lowest level since February 03.

Likewise, the EUR to JPY exchange rate sharply slashed 1.01% to ¥128.71, below Tuesday’s drop of 129.36.

Similarly, the EUR to CHF exchange rate edged down 0.67% to Fr.1.03.

Earlier, Russian President Vladimir Putin announced a military operation in Ukraine’s Donbas region.

Still, Putin denied the allegations of a full-scale invasion. He urged Ukrainian forces to put down their arms and go home.

However, Western capitals noted that Russia deployed more than 150,000 troops in combat formations.

Eventually, Ukraine declared a state of emergency across its territory, urging its three million citizens living in Russia to leave.

Then, Russia began evacuating its embassy in the Ukrainian capital city of Kyiv.

Meanwhile, the West levied sanctions on Moscow. The United States joined Germany in leaving Russia’s Nord Stream 2 gas pipeline project.

Moreover, Ukraine has received advanced anti-tank weapons and drones from NATO members.

The euro zone’s core consumer price index finalized at 5.10% year-over-year in January on the economic data front.

The annual inflation rate aligned with the average analysts’ estimate and up from December’s 5.0% YoY.

The energy segment contributed the most, with a 2.80% gain. Then, services jumped 0.98% as food, alcohol & tobacco improved 0.77%.

Accordingly, the sky-high CPI pressures the European Central Bank to rein in its current monetary policy.

Investors now widely expected the ECB to signal an end to its bond purchases in the third quarter.

Subsequently, this possible move could open the door to a rate hike before the close of the year.

FX Market; Euro, Aussie, Sterling Down

The dampened risk sentiment put the Euro and risk-sensitive currencies on edge amid the feverish tensions between Russia and Ukraine.

The Australian dollar shed 0.58% to $0.72 despite the hawkish Reserve Bank of Australia.

Like the Euro, the Pound sterling slipped 0.30% to $1.35 after the Bank of England hiked interest rates.

The BoE increased rates to 0.50% this month from the previous 0.25%, the second rise.

Then, the Canadian dollar pared its early gains, slashing 0.37% to C$1.28.

Meanwhile, the US dollar index benefited as it edged up 0.38% to 96.55, remaining near a one-week peak.

The Japanese yen also rose 0.39% to ¥114.52 as the Swiss franc elevated 0.55% to Fr.0.92.