Euro defensive as Ukraine tension, hawkish Fed buoy dollar, yen

Euro defensive as Ukraine tension, hawkish Fed buoy dollar, yen

TOKYO - The euro hovered near 1-month lows versus the dollar and yen on Wednesday, hurt by concerns about the potential for military conflict in Ukraine and ahead of the Federal Reserve wrapping a meeting that could herald accelerated monetary tightening.

Bank of Canada is also set to announce policy later in the day, and the Canadian dollar saw some of the biggest action in Asian trade, strengthening 0.21% as traders fretted over the outcome with chances of a rate hike seen finely balanced.

The euro slipped 0.07% to $1.12945 after hitting $1.12640 overnight for the first time since Dec. 21. It was little changed at 128.69 yen, after touching 128.25 in the previous session, also a first since Dec. 21.

Western leaders stepped up preparations for any Russian military action in Ukraine while Moscow said it was watching with great concern after 8,500 U.S. troops were put on alert to deploy to Europe in the event of an escalation.

Most of the market's angst was, however, focused on the Fed as traders awaited clues to the timing and pace of U.S. interest rate hikes, as well as how the central bank will go about slimming down its almost $9 trillion balance sheet, a