FOREX-Euro holds gains after hopes of easing tensions in Ukraine

By contrast, the safe haven yen JPY= softened slightly and last settled at 115.65 to the dollar, after briefly touching 114.99 on Monday when tensions were higher.

Overall, the dollar index =USD which measures the greenback against six major peers, lost ground on Tuesday and stood at 96.008.

However, analysts said the dollar is unlikely to fall too far.

The greenback ‘lost ground overnight as Ukraine’s geopolitical risk premium exited markets, but expectations of an aggressive Fed bull run should keep a base for (the dollar index) in place,” Westpac analysts said in a morning note to clients.

The Fed is set to raise interest rates at its March meeting, likely launching a fairly rapid hike program.

Higher PPI data also helped push up US benchmark bond yields.

The return on 10-year treasury bills US10YT=RR was last at 2.0329, back near its two-year high after plunging below 2% this week as tensions mounted.

The dollar and US rates could move later in the day after the minutes from the Fed’s monetary policy meeting in February. Investors are looking to see if the possibility of a 50 basis point rate hike has been raised.

This week, Fed officials publicly sparred over how aggressively to start raising rates at their March meeting, with St. Louis Fed President James Bullard reiterating calls for an acceleration on Monday. the pace of Fed rate hikes.

Other Fed officials were less willing to commit to a half-point hike, or even feared it would cause problems.

Rate hikes are also supporting the British pound, which was at $1.3543 GBP=D3.

Almost two-thirds of respondents to a Reuters poll of economists expect the Bank of England to hike rates another 25 basis points at its March meeting. It would be the first time the Bank has raised rates in three consecutive meetings since 1997.

World exchange rates

(Reporting by Alun John; Editing by Lincoln Feast.)

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