(Investing.com) The dollar was down on Monday morning in Asia, with currency markets monitoring the ongoing tensions over Ukraine. The safe-haven yen was not far from a two-week high while the euro was on edge as investors calculated the energy security and economic implications for Europe in the event of a Russian invasion.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies was down 0.21% to 95.820 by 10:27 PM ET (3:27 AM GMT).
The USD/JPY pair inched down 0.03% to 114.97.
The AUD/USD pair gained 0.49% to 0.7208, and the NZD/USD pair was up 0.29% to 0.6719.
The USD/CNY pair was steady at 6.3255, and the GBP/USD pair was up 0.23% to 1.3622.
"Russia-Ukraine tensions are starting to dominate risk sentiment and price action. The market is likely to keep chasing headlines without any clarity on the eventual outcome," said Barclays analysts in a note.
In reflecting on the situation, the euro got a small boost early in the Asian session as U.S. President Joe Biden and Russian President Vladimir Putin agreed "in principle" to hold a summit to discuss Ukraine. However, the summit would not take place should Russia invade Ukraine.
Meanwhile, the yen lost some ground on the dollar following the announcement. However, safe-haven assets such as the yen and Swiss franc benefitted from investors' risk aversion due to the tension in Eastern Europe.
The euro traded 0.12% higher at $1.13340 after falling earlier in the session due to Sunday's announcement from the Belarusian defence ministry that Russia would extend military drills in Belarus.
Central banks' policies also remain on investors' radars, with the People's Bank of China's loan prime rates due later in the day. The Reserve Bank of New Zealand will hand down its policy decision on Wednesday, and the Bank of Korea will hand down its policy decision a day later.
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Outside the Asia Pacific, Bank of England (BOE) Governor Andrew Bailey will appear before the Treasury Committee on Wednesday. Several U.S. Federal Reserve policymakers will also speak throughout the week, with investors looking for clues that a large 50 basis point rate hike could come at the Fed's March 2022 meeting instead of the more widely expected 25 basis point increase.
The BOE is also widely expected to hike rates again at its March meeting, giving the pound some support, although the situation in Ukraine perhaps capped gains.