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The dollar stabilized on Thursday and the Japanese yen held on to earlier gains after a Russian news report of mortar fire in eastern Ukraine rocked markets and boosted appetite for safe-haven assets.
Russia-backed rebels accused Ukrainian forces of bombing lands they control in violation of agreements aimed at ending the conflict in the disputed Donbas region, which Ukraine denied, the RIA news agency reported.
The dollar pared its gains in Asian trade after the news broke, but investors remained wary of Russia attacking Ukraine, despite optimism over the weekend about the possibility of a diplomatic solution to avert conflict.
The dollar index, which measures its price against six currencies, settled at 95.747, after rising from the 96 levels in Asian trading.
But in a sign that the markets did not panic yet, the Russian ruble remained below its highest level since November 2020 of 80 rubles to the dollar hit last month, while bond yields rose only slightly.
The euro rose from its previous lows, which fell 0.4 percent, after the news of Ukraine, but the Ukrainian denial calmed the market, and the euro recorded 1.1382 dollars.
The yen and the Swiss franc held on to their previous gains, the yen rose 0.2 percent and the Swiss franc rose 0.1 percent.
