By Alun John

HONG KONG (Reuters – Tensions across eastern Europe weighed heavily on the euro Tuesday, pushing demand for the dollar as well as the safe-haven yen. Meanwhile the greenback was supported by U.S. debates about aggressive interest rate rises.

After touching $1.1278 yesterday, the euro reached $1.1308 per dollar in Asia early on Tuesday. It was also at its lowest point in more than a week. After briefly reaching 114.99 Monday, the yen reached 115.33 dollars. This was its highest level in a week.

Other moves were slightly more careful and overall the result of the was at 96.244. That’s just below Monday’s two-week peak.

Overnight, investors were somewhat scared by the call of Volodymyr Zelenskiy, Ukrainian president to citizens, for them to raise the flags and sing in unison the National Anthem on February 16, which some Western media have suggested could be the start of an invasion from Russia.

However, officials from Ukraine insist that Zelenskiy is not anticipating an attack on this date but rather responding to media reports.

U.S. Federal Reserve officials continue to argue over the aggressiveness of future interest rate rises.

James Bullard, an official of the Hawkish Fed who broke ranks last week to demand a substantial 50 basis point rise, reiterated his call for a faster rate of interest rates hikes Monday. Other officials, however, were less cautious with their public statements.

According to Kim Mundy (OTC), senior currency strategist, Commonwealth Bank of Australia, tensions in Ukraine as well as more optimistic outlooks for Fed funds rates are supportive of the dollar for the short term.

Mundy stated that the best way to see which currency is having the greatest impact on trading is to examine and have observed that trades are a bit less active in the past two days, which indicates markets are aware of the situation at the Ukraine border.

We just need to continue watching the headlines, and wait to see what happens.

When investors feel nervous, the safe-haven currency yen is often a benefit. The contrast between U.S. Interest Rate hikes and dovish Bank of Japan might push the Japanese yen lower.

Last week, BOJ announced that it would purchase unlimited 10-year government bonds for 0.25%. Its decision to do so underlines its commitment to preventing rising global yields pushing up domestic borrowing prices too much.

On Monday, investors did not test the 0.25% mark.

Russia’s Ruble was volatile on Monday but gained 1.1% overall. It is slightly weaker in the early Asia region.