Dollar rises amid heightened Ukraine tensions By Sara Sjolin, MarketWatch LONDON (MarketWatch) — The euro dropped on Monday after several European Central Bank officials over the weekend opened the door for further monetary easing, the latest sign they are willing to take unconventional steps to fight low inflation. Meanwhile, the dollar strengthened as increased tensions in Ukraine lured investors into safe havens. Falling against all other major currencies, the euro EURUSD -0.10% traded at $1.3826, down from $1.3886 late Friday. The drop in the shared currency came as ECB President Mario Draghi said on Saturday a further rise in the euro would trigger additional monetary easing to fight the low level of inflation. A strong currency weakens inflation by reducing the costs of imported goods but also dampens exports because it makes goods and services more expensive in global markets. Draghi has in recent weeks noted that the strong euro is weighing on consumer prices in the euro zone, making clear that the ECB is concerned the appreciating currency could hamper the region’s recovery. Further monetary easing would ease demand for the euro and push the exchange rate lower. The comments from Draghi comes after he said at the April news conference that the Governing Council has discussed launching unconventional easing measures, including quantitative easing, and that such tools would fall within the central bank’s mandate. That view was echoed by ECB executive board member Benoît Coeuré on Sunday, who said the ECB may consider targeted asset purchases to hold-down long-term interest rates. Aside from monetary easing in the euro zone,traders focused on the ongoing crisis between Ukraine and Russia. Pro-Russian militants in eastern Ukraine ignored a deadline issued by Ukraine to disarm, prompting the government to mobilize the military as it struggled to prevent a replay of Russia’s takeover of Crimea. • Breaking-news alerts: Get free email alerts the instant news breaks “With the UN Security Council holding an emergency meeting today, the situation is certainly not getting any better and this could mean that investor risk appetite takes a knock once more,� Richard Perry, market analyst at Hantec Markets, said in a note. This should support the dollar, he said, with the ICE dollar index DXY +0.30% rising to 79.712 from 79.492 late Friday. Meanwhile, the Japanese yen slipped against the dollar. The greenback bought ¥101.739, up from ¥101.69. In other currency crosses, the pound GBPUSD -0.05% was slightly lower at $1.6728 from $1.6736, while the Australian dollar AUDUSD +0.22% rose to 94.04 U.S. cents from 93.95 U.S. cents late on Friday. More must-reads from MarketWatch: Coeure: ECB may look at buying assets No pings from suspected black boxes for 24 hours For one day, anyone in the U.S. can buy Google Glass Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.

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