- The dollar and the euro were higher on Tuesday as risk appetite recovered after Russian President Vladimir Putin indicated that the use of force in Ukraine would be a last resort.

USD/JPY rose to session highs of 101.95 and was last up 0.43% to 101.88, moving off the previous session’s one-month low of 101.19.

In a press conference on Ukraine, President Putin said a Russian military deployment is not needed now but the “possibility” still remains, and added that if Russia takes action it will be legitimate.

Concerns over the crisis in Ukraine eased earlier Tuesday after the Russian president ordered troops engaged in military exercises close to Ukraine’s borders to return to base.

Investors remained cautious after President Barack Obama said the U.S. was considering economic sanctions to "isolate Russia" following its military incursion into Ukraine’s Crimea region over the weekend.

The dollar continued to remain supported after the Institute for Supply Management reported Monday that its manufacturing index rose more than forecast in February. A separate report showed that U.S. personal spending was higher in January from a month earlier, indicating that the economy is improving.

The euro rose to fresh session highs against the dollar and the yen, with EUR/USD up 0.23% to 1.3765 and EUR/JPY climbing 0.63% to 140.19.

The common currency continued to remain supported after better-than-expected euro zone inflation data late last week eased pressure on the European Central Bank to tighten monetary policy at its upcoming meeting on Thursday.

The dollar pushed higher against the Swiss franc, with USD/CHF rising 0.12% to 0.8842.

Elsewhere, GBP/USD was up 0.14% to 1.6687.

Sterling’s gains were held in check after data on Tuesday showed that output in the U.K. construction sector eased in February, as heavy rain and flooding in parts of the country affected house building.

The Markit U.K. construction purchasing managers'' index fell to 62.6 in February from a reading of 64.6 in January, the highest level since August 2007. Analysts had expected the index to fall to 63.0 last month.

The Australian dollar moved higher, with AUD/USD rising 0.22% to trade at 0.8955. Earlier Tuesday the Reserve Bank of Australia left rates on hold at 0.25% and indicated that it continues to see a period of stability on monetary policy.

Meanwhile, NZD/USD was up 0.28% to 0.8393.

The U.S. dollar was little changed against the Canadian dollar, with USD/CAD trading at 1.1077.

The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.14% to 79.79.

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