On Thursday, the euro to US dollar exchange rate ticked lower after a Russian report of mortar fire in Ukraine triggered market fears.
The single currency lost 0.08% to 1.14 against the greenback. The currency pair also edged down from its gain of 0.15% yesterday.
Accordingly, Russia-backed rebels accused Ukrainian forces of starting an open fire on their territory.
They said that the move violated agreements to end the conflict in the contested Donbas area.
In line with this, the euro to USD exchange rate fell as much as 0.40% during intraday trading.
Investors immediately saw the threats of a wider war, causing a downtrend to risk-sensitive currencies.
However, Ukraine later denied the allegation, calming the widespread market jitters.
The standoff on Europe’s eastern edge is one of the most extensive crises in East-West relations for decades.
This political conflict started when Moscow massed more than 100,000 troops close to Ukraine’s borders.
Eventually, the West has threatened the Russian government with new sanctions if it would launch attacks.
However, a US official said that Russia had increased its troops rather than withdrawing.
The official further stated that Russia could launch a false pretext at any moment to justify an invasion. Regardless, Russia has dismissed the statement.
Consequently, the lack of clarity on the situation has sent investors towards the safe-havens. This movement has pulled the euro to USD exchange rate lower.
Similarly, the EUR/CHF pair slipped 0.28% to 1.05 as the EUR/GBP pair declined 0.27% to 0.84.
Moreover, investors also looked forward to the speech of the European Central Bank board member Philip Lane.
Meanwhile, the yen exchange rate contrasted the movement of the euro to the USD exchange rate.
The Japanese currency inched up 0.36% to 115.05 against the American dollar.
Then, the JPY also strengthened against the EUR and AUD, up 0.50% and 0.31%, respectively.
The upturn came after Japan’s latest trade data showed the most significant deficit in a single month.
Subsequently, the adjusted trade balance was $8.05 billion, while the unadjusted figure was $19.03 billion.
In addition, exports increased 9.60% year-on-year, while imports jumped 39.60% annually.
Likewise, the US dollar index, which tracks the greenback against its six rival currencies, elevated 0.25% to 95.93. It reversed its Wednesday loss of 0.30% to 95.70.
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