Investing.com - The euro took back losses against the dollar on Tuesday as the Russian standoff in Ukraine appeared to abate, which enticed investors out of safe-haven greenback positions.
In U.S. trading, EUR/USD was trading at 1.3729, down 0.04%, up from a session low of 1.3721 and off a high of 1.3782.
The pair was likely to find support at 1.3643, Thursday's low, and resistance at 1.3824, Friday's high.
Market sentiment improved after Russian President Putin said Moscow reserved the right to use force in Ukraine’s Crimea region in the event of “lawlessness” but added that such a move would be a last resort and added his government has no set plans to advance into the country.
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.
Still, the safe-haven dollar remained higher against the single currency, as Russian forces still maintain military presence in Crimea.
Concerns that the standoff may result in sanctions slapped on Russia and hamper global economic recovery also edged the dollar over the single currency.
Meanwhile in Spain, the number of unemployed individuals declined unexpectedly in February, easing concerns over the health of the euro zone’s fourth largest economy, official data showed on Tuesday.
In a report, Spain’s Employment Ministry said the number of unemployed people fell by a seasonally adjusted 1,900 last month, defying expectations for an increase of 74,200. The number of unemployed people rose by 113,100 in January.
Elsewhere, upbeat U.S. data on manufacturing and consumer spending continued to support the dollar as well.
The Commerce Department reported Monday that personal spending rose 0.4% in January, above expectations for an increase of 0.1%. Personal spending for December was revised down to a 0.1% gain from a previously reported increase of 0.4%.
The report added that personal income rose 0.3%, beating expectations for a 0.2% increase, after a flat reading in December.
Meanwhile, the core PCE price index, which is stripped of volatile food and energy components, inched up by a seasonally adjusted 0.1% in January, in line with expectations, after rising 0.1% in December.
The core PCE price index rose at an annualized rate of 1.2%, above forecasts for a 1.1% increase, after rising at a rate of 1.1% in December.
Consumer spending is the single biggest source of U.S. economic growth, accounting for as much as two-thirds of economic activity.
The Federal Reserve pays close attention to personal income and spending when deciding the fate of monetary policy, and Monday's data prompted investors to assume the U.S. central bank will continue scaling back its monthly asset purchases as the year progress.
Fed asset purchases, currently set at $65 billion a month in Treasury and mortgage debt, aim to spur recovery by suppressing long-term borrowing costs, which weakens the dollar as a side effect by sending investors to stocks in hopes investing and hiring accompany rising equity prices.
The dollar also saw support after the Institute for Supply Management revealed that its manufacturing purchasing managers’ index rose to 53.2 last month from 51.3 in January, beating forecasts for a reading of 52.0.
The euro was flat against the pound, with EUR/GBP down 0.01% to 0.8242, and up against the yen, with EUR/JPY gaining 0.70% and trading at 140.31.
Markit Economics reported earlier that its U.K. construction purchasing managers' index fell to 62.6 in February from 64.6 in January, the highest level since August 2007. Analysts had expected the index to fall to 63.0 last month
On Wednesday, the euro zone is to release data on retail sales.
Spain and Italy are to release data on service-sector activity.
The U.S. is to release the ADP report on private-sector job creation, which leads the government’s nonfarm payrolls report by two days. Meanwhile, the ISM is to publish a report service sector activity.