EUR/USD sinks to test below 1.13 the figure with Ukraine crisis heating up

• EUR/USD is on the back foot as traders await further developments to unfold amid the Ukraine crisis. 
• Federal Reserve sentiment is also contributing to a firmer US dollar. 

EUR/USD is trading flat in the session but is subject to volatility in financial markets pertaining to the escalations of the Ukraine crisis. The single currency has travelled from a high of 1.1319 to a low of 1.1296, weighed by risk-off tones following critical developments at the Kremlin.

Russian President Vladimir Putin recognised two breakaway regions in eastern Ukraine as independent on Monday and ordered the Russian Army to launch what Moscow called a peacekeeping operation into the area, accelerating a crisis the West fears could unleash a major war, Reuters reported. 

In response, Western nations will invoke sanctions on Russia for which US President Joe Biden has already signed an executive order to prohibit trade and investment between US individuals and the two breakaway regions of eastern Ukraine, the White House said.

Markets are now awaiting an emergency UN Council meeting on the Ukraine crisis that will start in about 20 minutes and will be chaired by Russia, which currently holds the presidency of the Council.

As the conflict over Ukraine appeared to worsen, US equities futures and European stocks fell with the Stoxx Europe 600 index has dropped to its lowest point since October. Futures on 10-year US Treasury notes increased, also representing investors' appetite for safe havens.

Besides the flare-up of geopolitics, on Monday, Fed's Bowman backed an interest-rate hike in March, arguing that while it was too early to determine whether the rise should be 50 basis-points, the topic was on the table for officials to debate. This comes before data that will likely show the Fed's key inflation index has jumped to a new four-decade high in January, bolstering the case for higher rates.