USD/JPY prints fresh lows as market weigh the recent moves from the Kremlin

• The Kremlin’s recognition of two regions in eastern Ukraine as independent has escalated tensions.
• The DXY is eyeing to settle above 96.00 on risk-off impulse in the market.

USD/JPY is bleeding out on the prospects of an escalation on the geopolitical side in the Russian and Ukraine crisis. USD/JPY is trading at fresh lows near 114.71. Moscow is continuously jeopardizing the situation for Ukraine. The labelling of two regions in eastern Ukraine as independent entities has escalated the tensions. The statement of recognizing Donetsk and Lugansk as independent after signing a decree along with the support from Separatists is a violation of cooperation with the West.

The headlines from the Russia-Ukraine tussle will continue to keep the investors on their toes. However, the investors will also keep an eye over the US Markit PMI Composite reports on Manufacturing and Services and Consumer Confidence numbers, which are due on Tuesday.

The USD/JPY pair had otherwise witnessed some stellar bids around 114.75 after the Federal Reserve (Fed)’s Bard Governor Michelle Bowman keeps the windows open for a potential 50 basis points (bps) interest rate hike in March. The comments have cleared that an aggressive tightening policy of a 50 bps hike is under the choice list of the Fed to combat the rising inflation.

For deciding the extent of an interest rate hike, the Fed has to pass one more inflation report and employment figures, which may be very crucial before reaching an outcome. Adding to that, the Fed’s Michelle Bowman states that the Fed's balance sheet is highly required to scale down to an appropriate and manageable level that may help control the ramping-up inflation.

Meanwhile, the US dollar index (DXY) is eyeing to settle above 96.00 on geopolitical jitters. The market participants have also channelized their funds into DXY on a hawkish stance from the Fed’s Michelle Bowman, which has underpinned the greenback.