TOKYO- The euro hovered near its weakest in a month versus the safe-haven dollar and yen on Wednesday as traders fretted over a potential military conflict in Ukraine and the possibility of accelerated Federal Reserve policy tightening.
The euro was about flat at $1.1303 after dipping to $1.1264 overnight for the first time since Dec. 21. It slipped 0.06 percent to 128.64 yen, after touching 128.25 in the previous session, also a first since Dec. 21.
Western leaders stepped up preparations for any Russian military action in Ukraine while Moscow said it was watching with great concern after 8,500 US troops were put on alert to deploy to Europe in the event of an escalation.
Meanwhile, the Fed ends a two-day policy meeting later in the global day, with market players anxiously awaiting further clues on the timing and pace of interest rate hikes, as well as how the central bank will go about slimming down its almost $9 trillion balance sheet, a process dubbed quantitative tightening (QT).
Money markets are currently priced for a first hike in March, followed by three more quarter-point increases by year-end.
The dollar index, which measures the currency against six major peers, was flat at 95.973, after climbing to 96.273 on Tuesday, the highest since Jan. 7. It has climbed as much as 1.74 percent from a two-month low touched on Jan. 14.
“Market sentiment remains fragile,” TD Securities strategists wrote in a client note. – Reuters
