Investing.com - The dollar and the euro rose to session highs against the yen on Tuesday as the threat of military action in Ukraine faded after Russian President Vladimir Putin said he saw no need to use military force for now.
USD/JPY rose to session highs of 102.14 and was last up 0.66% to 102.11, recovering from the previous session’s one-month low of 101.19.
Market sentiment improved after President Putin said that Russia reserved the right to use force in Ukraine’s Crimea region in the event of “lawlessness” but added that it would be a last resort.
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 Crimea. Worries over the possibility of sanctions being imposed on Russia that could hamper the global economic recovery also lingered.
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 rose to session highs against the yen, with EUR/JPY advancing 0.70% to 140.30. Elsewhere, the euro pulled back from session highs of 1.3782 against the dollar, with EUR/USD last trading at 1.3734.
Investors were starting to turn their attention to Thursday’s European Central Bank policy meeting. The euro remained supported after slightly stronger-than-expected euro zone inflation data for February last week eased pressure on the bank to tighten monetary policy, in order to stave off the risk of deflation.
Elsewhere, the dollar extended gains against the Swiss franc, with USD/CHF rising 0.44% to 0.8870.
GBP/USD dipped 0.02% to 1.6663. 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 0.10% 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 0.20% to 0.8386.
The U.S. dollar pushed higher against the Canadian dollar, with USD/CAD climbing 0.23% to 1.1102.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.13% to 80.18.