Investing.com - The dollar was higher against the euro on Monday after the European Central Bank warned that continued strength in the single currency could prompt further easing, while yen was steady near three-week highs as tensions in Ukraine underpinned safe haven demand.
EUR/USD was last trading at 1.3849, down 0.25% from 1.3883 on Friday.
The euro weakened broadly after ECB President Mario Draghi said Saturday that increases in the euro exchange rate would trigger additional monetary easing to keep inflation from falling further.
Data last month showed that the annual rate of inflation in the euro area slowed to 0.5%, well below the ECB’s target of just under 2%. The central bank kept monetary policy on hold unchanged earlier this month, but said it would consider unconventional measures if needed to prevent low inflation from becoming entrenched in the euro zone.
The dollar was little changed against the yen, with USD/JPY inching up 0.03% to 101.64, not far from the three-week trough of 101.31 reached on Friday.
Tensions between Russia and Ukraine mounted on Monday as a deadline set by Ukraine for pro-Russian separatists to leave government buildings they are occupying in eastern Ukraine expired.
The U.S. has indicated that it is prepared to impose more sanctions against Moscow if Russian encroachments in eastern Ukraine continue.
Sterling was almost unchanged against the dollar, with GBP/USD trading at 1.6730, while the Swiss franc slipped lower, with USD/CHF rising 0.15% to 0.8772.
The Australian dollar remained supported close to five month highs, with AUD/USD edging up 0.05% to 0.9400.
The New Zealand dollar was lower, with NZD/USD down 0.39% to 0.8655, while USD/CAD dipped 0.07% to 1.0971.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.15% to 79.68, extending its pullback from the three-week trough of 79.38 struck last Thursday.