Investing.com - The dollar and the euro moved higher against the yen on Tuesday as investor demand for safe haven assets declined as tensions over the political and military crisis between Russian and Ukraine eased.
USD/JPY rose to session highs of 101.95 and was last up 0.41% to 101.86, recovering from the previous session’s one-month low of 101.19.
Market sentiment was boosted after Russian President Vladimir Putin said a military deployment in Ukraine is not needed now but the “possibility” still remains, and added that if Russia takes action it will be legitimate.
Markets built on earlier gains that came after the Russian defense minister ordered troops engaged in military exercises close to Ukraine’s borders to return to their bases.
Market sentiment remained fragile, with Russian forces still maintaining a military presence in Ukraine’s Crimea region. Meanwhile, the U.S. was likely to impose economic sanctions on Russia later in the week, following its military incursion into Crimea.
The dollar continued to remain supported after upbeat U.S. data on manufacturing and consumer spending on Monday indicated that the economy is improving.
The euro advanced against the dollar and the yen, with EUR/USD up 0.24% to 1.3768 and EUR/JPY climbing 0.67% to 140.24, moving off Monday’s lows of 139.14.
The common currency continued to remain supported after better-than-expected euro zone inflation data late last week eased pressure on the European Central Bank to tighten monetary policy at its upcoming meeting on Thursday.
The dollar edged higher against the Swiss franc, with USD/CHF inching up 0.08% to 0.8839.
Elsewhere, GBP/USD was up 0.18% to 1.6696. Earlier Tuesday, data showed that output in the U.K. construction sector eased in February, as heavy rain and flooding in parts of the country affected house building.
The Markit U.K. construction purchasing managers' index fell to 62.6 in February from a reading of 64.6 in January, the highest level since August 2007. Analysts had expected the index to fall to 63.0 last month.
The Australian dollar was slightly higher, with AUD/USD rising 0.11% to trade at 0.8944. The Reserve Bank of Australia left rates on hold at 0.25% at its rate review earlier in the day, and indicated that it continues to see a period of stability on monetary policy.
Meanwhile, NZD/USD was up 0.25% to 0.8390.
The U.S. dollar was little changed against the Canadian dollar, with USD/CAD dipping 0.05% to 1.1072.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.14% to 79.97.