Eastern Europe Tensions Spur Euro Drop as Dollar and Safe-Haven Assets Surge

The worsening geopolitical tensions in Eastern Europe, with the likelihood of war between Ukraine and Russia becoming increasingly imminent, plunged the euro on Friday as it remains low on Monday at $1.1346, far below last week’s high of $1.1495.

Meanwhile, the dollar and safe-haven assets rose as investor appetite for risk assets fell with the looming threat of war in Eastern Europe. The yen also rose to 115.53 yen following a five-week low of 116.34 from the previous week.

The White House made a grim announcement last week about an imminent Russian invasion of Ukraine which is expected to happen any day now, even as the West imposed additional sanctions on Russia and threatened further consequences.

The dollar index edged higher to 96.059 during the Asia session. Economists have predicted the euro and the currencies of oil importers to take a hit as increasing geopolitical tensions in between Russia and Ukraine push oil prices higher.

According to analysts at Westpac, "With Fed hike expectations surging again and geopolitical tensions in Ukraine escalating dramatically the dollar index should be back on the front foot again."